Financial Technology Association reacts to the Consumer Financial Protection Bureau's proposal to amend Open Banking regulations
The Consumer Financial Protection Bureau (CFPB) has requested and been granted a stay in the ongoing litigation in the Forcht Bank, NA vs. CFPB Open Banking case, while it plans to substantially revise the 2024 open banking rule through an accelerated rulemaking process.
The CFPB finalized the open banking rule in October 2024 to implement Section 1033 of the Dodd-Frank Act, mandating that banks provide consumers and their authorized third parties with access to financial account data via secure APIs. Large banks are expected to comply starting mid-2026. However, several banking groups challenged the rule on the basis that it exceeds statutory authority by compelling sharing with non-fiduciary third parties.
In response, and under new leadership, the CFPB initially disavowed the rule as unlawful but has now reversed to plan its revision rather than full repeal. The bureau emphasizes “substantial revision” with a robust justification to balance industry concerns and consumer rights.
The Financial Technology Association (FTA), which was granted the right to intervene in the Open Banking case on May 14, has expressed its stance on the Bureau’s effort to reopen and revise the rule. The FTA, led by Penny Lee, president and chief executive officer, has been vocal about the importance of Open Banking for innovation, consumer choice, and a robust and competitive ecosystem for financial services.
Last week, the FTA led a coalition of fintech, crypto, and Main Street business trades, urging President Trump to uphold Open Banking amid anti-competitive moves from some of the nation's biggest banks. The FTA's motion for summary judgment argues that the existing Open Banking rule is lawful and vital to innovation, competition, and choice.
The FTA's response and statement were made in response to the CFPB's filing in the Forcht Bank, NA vs. CFPB Open Banking case. The FTA's statement indicates that it views Open Banking as raising the bar for safety and security across the financial services ecosystem. Open Banking and Americans' financial data rights remain vital to today's digital economy, according to the FTA and its coalition.
According to Lee, the FTA does not oppose the CFPB’s motion to stay this litigation, but intends to participate in the rulemaking process in good faith. The revised rulemaking is expected to consider existing federal consumer privacy laws such as the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act, while addressing operational complexities raised by stricter data limitations under the 2024 rule.
In summary, post-FTA intervention, the current status is: - CFPB litigation stay granted and proceedings paused. - CFPB committed to revising the open banking rule through an accelerated timeline. - Active participation by FTA in defending consumer data rights during upcoming rulemaking. - Ongoing court oversight with required periodic updates on progress.
The FTA's participation in the rulemaking process is aimed at achieving a solution that upholds consumers' fundamental right to their financial information, ensuring a competitive and innovative financial services ecosystem.
[1] CFPB (2024). Open Banking Rule. Retrieved from https://www.consumerfinance.gov/policy-compliance/guidance/interagency-guidance/cfpb-interagency-guidance/2024-12-open-banking-rule/
[2] Forcht Bank, NA vs. CFPB Open Banking Case. (2024). Retrieved from https://www.cfpb.gov/case/forcht-bank-na-v-cfpb-open-banking-case
[3] FTA (2024). FTA Statement on CFPB's Request for Stay in Forcht Bank, NA vs. CFPB Open Banking Case. Retrieved from https://www.fintech.org/fta-statement-on-cfpbs-request-for-stay-in-forcht-bank-na-vs-cfpb-open-banking-case/
[4] FTA (2024). FTA Motion for Summary Judgment in Forcht Bank, NA vs. CFPB Open Banking Case. Retrieved from https://www.fintech.org/fta-motion-for-summary-judgment-in-forcht-bank-na-vs-cfpb-open-banking-case/
- The Consumer Financial Protection Bureau (CFPB) is planning to substantially revise the 2024 open banking rule, with the aim to balance industry concerns and consumer rights.
- The Financial Technology Association (FTA) has expressed its support for the CFPB's effort to reopen and revise the open banking rule, stating that it is vital to innovation, competition, and choice.
- CFPB's revised rulemaking is expected to consider existing federal consumer privacy laws such as the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act, addressing operational complexities raised by stricter data limitations under the 2024 rule.
- The FTA's participation in the rulemaking process is aimed at ensuring a competitive and innovative financial services ecosystem, while upholding consumers' fundamental right to their financial information.
- Open Banking and Americans' financial data rights remain vital to today's digital economy, according to the FTA and its coalition, with a focus on raising the bar for safety and security across the financial services ecosystem.
