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CFPB PROPOSES RULE TO JUMPSTART COMPETITION AND ACCELERATE SHIFT TO OPEN BANKING

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 * Español

Personal Financial Data Rights rule would challenge industry to compete for
customers, protect consumers from excessive surveillance, and help people walk
away from bad service

OCT 19, 2023
Share & print
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WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB)
proposed a rule that would accelerate a shift toward open banking, where
consumers would have control over data about their financial lives and would
gain new protections against companies misusing their data. The proposed
Personal Financial Data Rights rule activates a dormant provision of law enacted
by Congress more than a decade ago. It would jumpstart competition by forbidding
financial institutions from hoarding a person’s data and by requiring companies
to share data at the person’s direction with other companies offering better
products. The proposed rule would allow people to break up with banks that
provide bad service and would forbid companies that receive data from misusing
or wrongfully monetizing the sensitive personal financial data.

“With the right consumer protections in place, a shift toward open and
decentralized banking can supercharge competition, improve financial products
and services, and discourage junk fees,” said CFPB Director Rohit Chopra.
“Today, we are proposing a rule to give consumers the power to walk away from
bad service and choose the financial institutions that offer the best products
and prices.”

Currently, people’s access to their financial data is inconsistent from one
financial institution to another. Even among companies that do share data at a
customer’s request, the terms of the sharing vary greatly. This lack of norms in
the market allows incumbents to play games to their own customers’ detriment –
including hiding or obscuring important data points like prices. This undercuts
the ability of small or upstart institutions to compete with incumbents, even
when people want their data shared.

Under the proposed Personal Financial Data Rights rule, people would have the
power to share data about their use of checking and prepaid accounts, credit
cards, and digital wallets. This would allow them to access competing products
and services without worrying that their data might be collected, used, or
retained to serve commercial interests over their own. Importantly, people could
be certain that their data would be used only for their own preferred
purpose—and not for financial institutions or tech companies to surveil and
manipulate.

The proposed Personal Financial Data Rights rule would ensure that consumers:

 * Get their data free of junk fees: Banks and other providers subject to the
   rule would have to make personal financial data available, at no charge to
   consumers or their agents, through dedicated digital interfaces that are
   safe, secure, and reliable.
 * Have a legal right to share their data: People would have a legal right to
   grant third parties access to information associated with their credit card,
   checking, prepaid, and digital wallet accounts. This type of data can help
   firms provide a wide range of products and services, including cash
   flow-based underwriting that stands to improve pricing and access across
   credit markets. When these firms offer a desired product or service, people
   would be able to switch providers more easily. They would also be able to
   more conveniently manage accounts from multiple providers.
 * Can walk away from bad service: Not only would the proposed rule increase
   competitive forces among financial institutions, it would also enable people
   to walk away from bad services and products. People can become trapped by
   providers that hold their data, but this proposal would allow them to more
   easily shift their data to a competitor offering better or lower priced
   products and services.

The proposed Personal Financial Data Rights rule would protect the interests of
both consumers and financial firms through:

 * Robust protections to prevent unchecked surveillance and misuse of data:
   Companies that people authorize to access data on their behalf would have to
   agree to certain important conditions. Third parties could not collect, use,
   or retain data to advance their own commercial interests through actions like
   targeted or behavioral advertising. Instead, third parties would be obligated
   to limit themselves to what is reasonably necessary to provide the
   individual’s requested product.
 * Meaningful consumer control: The proposal would also give people the right to
   revoke access to their data. When a person revokes access, the proposal would
   require that data access end immediately, and deletion would be the default
   practice. Access can be maintained for no more than one year, absent the
   individual consumer’s reauthorization.
 * A move away from risky data collection practices: Many companies currently
   access consumer data through screen scraping, which often requires people to
   share their usernames and passwords with third parties. This proposal seeks
   to move the market away from these risky data collection practices.
 * Fair industry standard-setting: Instead of providing detailed technical
   standards, the rule contains several requirements to ensure industry
   standards are fair, open, and inclusive. The CFPB intends to assess future
   standards developed by the private sector under the terms described in the
   rule.

Under the proposal, the requirements would be implemented in phases, with larger
providers being subject to them much sooner than smaller ones. In addition, the
many community banks and credit unions that have no digital interface at all
with their customers would be exempt from the rule’s requirements.

The proposed rule is the first proposal to implement Section 1033 of the
Consumer Financial Protection Act, which charged the CFPB with implementing
personal financial data sharing standards and protections. The CFPB intends to
cover additional products and services in future rulemaking.

Read the regulatory text of section 1033 .

Read today’s Notice of Proposed Rulemaking.

Comments must be received on or before December 29, 2023. The CFPB invites
comments on any aspect of this proposal, including on other consumer financial
products and services that could be covered via subsequent rulemaking.

Read Prepared Remarks of CFPB Director Rohit Chopra on the Proposed Personal
Financial Data Rights Rule.

Consumers can submit complaints about financial products or services by visiting
the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who they believe their company has violated federal consumer financial
protection laws are encouraged to send information about what they know to
whistleblower@cfpb.gov.

--------------------------------------------------------------------------------



The Consumer Financial Protection Bureau is a 21st century agency that
implements and enforces Federal consumer financial law and ensures that markets
for consumer financial products are fair, transparent, and competitive. For more
information, visit www.consumerfinance.gov.

Topics:
 * • Innovation
 * • Financial service providers
 * • Banking
 * • Rulemaking
 * • Data
 * • Access to credit


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