The Consumer Financial Protection Bureau’s (CFPB) proposed open banking regulations have drawn criticism from two industry groups, which claim that the rules fall short in adequately protecting consumer data.
In October, the CFPB unveiled its long-anticipated open banking proposal aimed at enhancing competition within the U.S. banking and payments landscape. The new rule requires consumer financial service providers to share data, at the user’s discretion, with other companies in the ecosystem that offer better products and services.
However, in a response to the CFPB’s recommendations, The Clearing House Association and the Bank Policy Institute argue that the proposed changes do not sufficiently safeguard sensitive consumer financial information or ensure compliance from data recipients.
The organizations assert that essential protections, including those related to consumer authorization and acceptable uses of consumer data, should extend to all third parties and aggregators involved in the data exchange process. They also advocate for a prohibition on screen scraping once a data provider has implemented a developer interface.
The associations emphasize the importance of keeping consumers’ personal and financial information secure at all points of sharing, including when it is stored outside of financial institutions. They recommend that the CFPB enforce direct requirements on third parties and data aggregators, as well as clarify liability for unauthorized transactions or failures to protect consumer information.
Furthermore, they propose that data providers be allowed to receive compensation from third parties to help cover “commercially reasonable costs” associated with enabling data sharing.
In a separate response to the proposal, the American Fintech Council raised concerns regarding the restrictions placed on data providers and third parties related to consumer data usage.
The CFPB has indicated that it anticipates finalizing the open banking regulations by 2024. Earlier this year, the agency also cautioned against large companies attempting to dominate open banking standards.