CFPB establishes rules for standard-setting bodies

This rule is designed to assist companies in complying with the CFPB’s forthcoming Personal Financial Data Rights Rule. It outlines the qualifications that standard-setting bodies must meet to receive recognition from the CFPB. Additionally, the rule provides a comprehensive guide for standard setters to apply for recognition and explains how the CFPB will evaluate these applications. 

CFPB representatives talked about the importance of preventing dominant firms from manipulating standards to maintain their market dominance. The rule aims to address this issue by establishing attributes that the CFPB will consider when recognising standard setters. 

According to consumerfinance.gov, the CFPB is actively working towards advancing Open Banking in the United States. In 2010, Congress passed legislation granting consumers new personal financial data rights. Enforcing these rights is expected to create opportunities for smaller financial institutions and startups. However, the full implementation of these rights has been delayed due to the absence of a rule from the CFPB. The proposed rule, introduced in October 2023, is set to be finalised in the near future. 

As part of the upcoming Personal Financial Data Rights rule, the CFPB intends to allow companies to use technical standards developed by recognised standard-setting organisations. The new rule marks the beginning of the recognition process for these organisations. 

Consensus standards issued by recognised standard setters are expected to facilitate the implementation of the Personal Financial Data Rights rule and accelerate the transition towards open banking.

What are the main attributes for standard setters?

To be recognised by the CFPB, standard setters must apply and exhibit attributes such as openness, transparency, balanced decision-making, consensus-driven development, and due process and appeals mechanisms. 

The rule also establishes procedures for the CFPB to revoke recognition of standard setters and sets a maximum recognition duration of five years. This ensures that recognised standard setters continue to adhere to the attributes specified by the CFPB. Additionally, the rule includes a step-by-step guide to assist standard setters in applying for recognition, inviting interested parties to engage with the CFPB when ready to demonstrate compliance with the established attributes.