After obtaining permission from a federal judge, the FTA can now intervene in a lawsuit involving bank trade groups aiming to repeal a CFPB rule mentioning a new US Open Banking system. The association reasoned that the bureau was not likely to protect its members’ interests in a case brought up by banking groups over the implementation of the Open Banking rule.
By intervening in the case, the association is set to be able to safeguard the Open Banking rule during a period of CFPB reorganising its enforcement priorities, settling many lawsuits against it and leaving behind litigation it brought under the Biden administration. Commenting on the move, representatives from the FTA underlined that the court ruling provides the fintech sector with the ability to defend US residents’ financial data rights, in turn ensuring that large financial institutions do not determine the future of Open Banking.
Open Banking focuses on allowing consumers to conveniently access and transfer their financial data to another bank or financial services company, with no fees imposed. Regulators and other market participants consider that the rule would scale competition and offer financial consumers alternatives that might provide them with improved services and rates. At the same time, fintech companies and other financial startups see Open Banking as a substantial opportunity.
However, banks dispute that the law involves costs that they are not allowed to recoup and does not indicate data protections of a third party when a financial institution transfers customer data.
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