As the industry awaits a new proposed rule from the Consumer Financial Protection Bureau (CFPB) implementing the “open banking” provision found in Section 1033 of the Dodd-Frank Act, industry reporters are expecting a legal challenge to the rule.
Last week, American Banker reported that the CFPB is aiming to appease both banks and fintech companies as it addresses whether banks can charge third parties for access to their customers’ data. Under Section 1033 of the Dodd-Frank Act, banks are prohibited from charging customers for access to their data. Rulemaking would address the limits of this prohibition.
Per the report, the CFPB is aiming to do so through “data rationing,” which would allow banks to charge third parties for data after exceeding a certain threshold. Such an approach could trigger a legal challenge from fintechs.
“Section 1033 is a few short paragraphs in a fifteen-year-old piece of legislation, which pose endless complex considerations,” said IBAT President and CEO Christopher Williston. “Rulemaking is certain to draw a legal challenge because the statute leaves enough room on all sides for competing interests to question how regulators fill the gaps. I expect that lawmakers will have to significantly redraft Section 1033 before we ever get a fully implemented rule.”
