The Financial Technology Association (FTA) has criticized US regulators’ plans to rescind open banking rules, describing the move as a “handout to Wall Street banks.”
In a legal filing, the Consumer Financial Protection Bureau (CFPB) announced it will petition a court to rescind the 1033 open banking rule. This rule, finalized in October, granted Americans the right to instruct their banks to share financial data with third-party providers.
However, the rule has faced significant opposition from traditional financial institutions, which have highlighted concerns about potential liability for data breaches and the ability to charge for data access. Reports in early May suggested that Wall Street was likely to succeed in its efforts, and the CFPB is now moving forward to eliminate the rule.
Penny Lee, CEO of the FTA, stated, “Vacating the 1033 rule is a handout to Wall Street banks, who are trying to limit competition and restrict Americans’ access to digital financial services. Americans must have the right to control their financial lives, not the nation’s biggest banks.”
This change reflects a broader shift in the CFPB’s approach under Trump, including a recent reversal of previous stances under acting Director Russell Vought. For instance, the Bureau has abandoned an interpretive rule that classified pay-in-four BNPL lenders similarly to credit card providers. In recent weeks, it has also dropped several lawsuits against major banks, including JPMorgan Chase, Bank of America, and Wells Fargo, related to fraud on the Zelle P2P payments network.
Additionally, a rule that would have provided the CFPB oversight of tech giants like Apple, Google, and others offering digital payment apps was recently dismissed by both the Senate and House of Representatives.