CPFB Open Banking rule facing backlash
Published by: Sean Brown
October 30, 2024 | Regulatory
The need to innovate, grow, and expand member service must be carefully balanced with the need to prevent fraud, preserve member data, and remain fiscally sound. That’s why the League raised concerns about a final CFPB rule that could increase fraud and credit union liability.
In fact, it opposes any federal regulation that attempts to force innovation without regard to the potential impact on fraud.
The Consumer Financial Protection Bureau’s (CFPB) final rule on Personal Financial Data Rights (“Open Banking”) would require credit unions with more than $850 million in assets to implement systems making certain data available to consumers and authorized third parties in electronic form.
In 2023, the League submitted a comment letter opposing this rule, arguing that while the Dodd-Frank Act calls upon the CFPB to promote fair and competitive markets, the plain text of Section 1033 does not reflect an intention to re-engineer data-sharing mechanisms to alter financial sector competition. Additionally, OCUL is concerned this rule would further jeopardize member data, increase fraud exposure and liability, and punitively punish those who cannot comply fiscally.
The rule has already been met with a legal challenge. The Bank Policy Institute has joined with their Kentucky-based counterparts to file a suit in federal court, alleging the CFPB’s new rule is overreaching and “fundamentally irrational.” The League will continue to monitor developments and corresponding challenges to the rule as it moves through the judicial process. For more information, including summaries, check join the newest members-only Huddle community, Advocacy on Point.
Contact Sean Brown for questions or assistance.
