Washington, D.C. – The CFPB indicated today that it has determined that its Section 1033 rule is unlawful and should be set aside. In a status report filed today in the ongoing litigation, the CFPB acknowledges that the rule exceeds the CFPB’s legal authority and states that it will file a motion for summary judgment on that basis. BPI and the Kentucky Bankers Association issued a response:
“The CFPB has taken the appropriate step of acknowledging Section 1033’s clear legal deficiencies, and we urge the big tech companies to do the same, rather than protracting a legal dispute that endangers consumer financial data. Banks have already made it possible for hundreds of millions of Americans to safely access and share their data – the current rule undermines and disrupts that ecosystem to the benefit of tech companies looking to profit even further from consumers’ data.”
Additional Background:
The CFPB’s Section 1033 rule governs how consumers’ financial data can be accessed and shared between banks and third parties. The plaintiffs argue the rule fails to adequately protect consumer data by allowing risky practices like screen scraping and imposing no real accountability on fintechs when breaches occur.
While the rule is sometimes referred to as “open banking,” a competitive data-sharing ecosystem already exists in the U.S., which the rule would disrupt. Over 120 data aggregators currently connect financial data across providers. Plaid, one of the largest aggregators, connects to more than 200 million bank accounts. Financial Data Exchange, a nonprofit created through a bank-fintech partnership, has built a secure API linking more than 114 million accounts.
To learn more about the challenge, visit bpi.com/section1033.
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About Bank Policy Institute.
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
Media Contacts
- Austin Anton, Bank Policy Institute, austin.anton@bpi.com
- Matt Simpson, Kentucky Bankers Association, msimpson@kybanks.com
