The Consumer Financial Protection Bureau (CFPB) has designated the Financial Data Exchange (FDX) as the first standard-setting body for its new open banking regime.
In October, the CFPB released its Personal Financial Data Rights rule, which mandates financial institutions, credit card issuers, and other service providers to grant individuals access to their personal financial data and facilitate its transfer to another provider upon the consumer’s request, at no charge.
To support the implementation of this rule, the CFPB established a formal application process for entities wishing to be recognized as industry standard-setting organizations, allowing them to create standards to aid compliance.
FDX, which consists of over 200 members and aims to establish a common, interoperable standard for secure access to financial records, has successfully completed the application process. However, this approval comes with specific conditions.
The CFPB has raised concerns regarding potential dominance by large banks in the process, previously stating that it would "not recognize any standard-setting organization that is rigged in favor of any set of industry players." As part of FDX’s approval, there will be restrictions against ‘pay-to-play’ scenarios and other conflicts of interest. Additionally, FDX is required to report on market adoption to the CFPB and to make its consensus standards publicly available while ensuring that non-members have equal access to these resources.
The new rule has encountered some opposition; in October, the Bank Policy Institute and the Kentucky Bankers Association filed a lawsuit against the CFPB, claiming that the agency exceeded its authority in issuing the new open banking regulations.