WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today announced the finalization of a rule that will shape the future of open banking in the United States by establishing a formal process to recognize standard-setting bodies. This step will facilitate the implementation of the CFPB’s forthcoming Personal Financial Data Rights Rule.
The rule, effective immediately, outlines the necessary attributes for standard-setting organizations seeking recognition from the CFPB. Such bodies must demonstrate openness, transparency, balanced decision-making, consensus, due process, and appeal mechanisms.
These criteria aim to ensure that the development of technical standards for data sharing does not favor any particular group of industry participants and remains fair to all stakeholders, including public interest groups and small financial entities.
CFPB Director Rohit Chopra emphasized the importance of the rule, stating, "Industry standards can be weaponized by dominant firms in order to maintain their market position, undermining competition for all." He further explained that the new regulations will prevent these firms from skewing standards to their advantage.
The rule also provides a step-by-step guide for standard-setting organizations to follow when applying for recognition by the CFPB, which includes a comprehensive review process by the bureau. Additionally, the CFPB has the authority to revoke recognition and requires re-application every five years to maintain the status, ensuring ongoing compliance with the established attributes.
This move by the CFPB is part of a broader effort to promote open banking, giving consumers more control over their personal financial data and enhancing competition among financial institutions. The shift towards open banking has been anticipated since Congress passed new personal financial data rights in 2010, but the full implementation has been pending the establishment of a rule by the CFPB, which is expected to be finalized in the coming months.
The bureau encourages interested parties to start engaging with the CFPB and prepare for the upcoming changes that the Personal Financial Data Rights rule will bring. The finalized rule on the recognition of standard-setting organizations is now available for review.
The CFPB, established to implement and enforce federal consumer financial law, is committed to ensuring that consumer financial markets are fair, transparent, and competitive. This article is based on a press release statement from the CFPB.
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