A coalition of banking groups has convinced a federal judge to temporarily block enforcement of a US CFPB rule, aimed at optimising the way users switch financial-service providers.
According to Reuters, a US District Judge has announced in a ruling the decision to pause compliance deadlines for the so-called “Open Banking” rule in a lawsuit brought by Forcht Bank, the Kentucky Bankers Association, and the Bank Policy Institute.
The initiative to halt the rule took place while the consumer bureau, which is currently under new leadership in Republican President Donald Trump’s administration, undertakes a new rulemaking process. Furthermore, the move to revise the rule comes amid a broader Trump-era push to rein in the CFPB, which a top administration official recently mentioned it should be shut down.
More information on the US judge’s decision to temporarily block the consumer agency’s Open Banking rules
Following this announcement, the Bank Policy Institute, the Kentucky Bankers Association, and Forcht Bank welcomed the judge's order in a joint statement. The decision is expected to ensure that banks won’t be forced to invest time and resources preparing for a rule that is currently being rewritten.
The rule was finalised in 2024 under Democratic President Joe Biden, and it was developed in order to give consumers the possibility to access and share data from bank accounts, credit cards, mobile wallets, payment apps, and other financial products more easily and at no cost.
The banking groups in their lawsuit mentioned that the regulation exceeds the agency’s authority and imposes costly burdens. The US judge agreed, mentioning that the plaintiffs are likely to succeed in showing the CFPB overstepped its authority. Furthermore, it was also said that the plaintiffs and their members are being compelled to incur expenses that would be unrecoverable and unnecessary, as the plaintiffs were likely to succeed on the merits of their lawsuit.
The injunction is expected to remain in effect until the agency completes its reconsideration.
