June 13, 2023

CFPB outlines perspective on open banking, 1033 rulemaking

CFPB logoCFPB Director Rohit Chopra published a blog Monday outlining the bureau’s efforts “to accelerate the shift to open banking through a new personal data rights rule intended to break down…obstacles, jumpstart competition, and protect financial privacy.” Section 1033 of the Dodd-Frank Act provides for consumer rights to access financial records; NAFCU has urged the bureau to ensure the rulemaking is not overly burdensome on credit unions.

In the blog post, Chopra highlighted the bureau’s desire to establish “a more competitive market” and new technologies to do so “have not yet reached their full potential.” The section 1033 rulemaking – for which the bureau outlined proposals in October 2022 and plans to release a formal proposal in the coming months, with the intention of finalizing in 2024 – will ensure open banking standards “appropriately allow consumers to exercise their personal financial data rights.”

In response to the outline of section 1033 proposals, NAFCU argued many under consideration presented significant challenges for credit unions, both technical and competitive in nature, that could lead to “enormous compliance costs and ultimately distort the financial sector’s competitive landscape.”

Chopra also noted that, in an attempt for the bureau to not micromanage the open banking process, “many of the details in open banking will be handled through standard-setting outside of the agency.”

Read Chopra’s blog post. NAFCU will continue to work with the bureau on its efforts to balance consumer protections while ensuring a reasonable regulatory environment for credit unions.