CFPB to Issue Data Sharing Plan This Year
Learn why the CFPB plans to issue a data sharing plan later this year aimed at allowing consumers—opposed to banks and CUs—access to financial information.
Aim is to allow consumers access to their financial information.
The CFPB later this year will propose a plan to move toward “open banking”—a system in which consumers, and not credit unions or banks, control their financial data, CFPB Director Rohit Chopra said Monday.
“The CFPB is working to accelerate the shift to open banking through a new personal data rights rule intended to break down these obstacles, jumpstart competition, and protect financial privacy,” Chopra wrote, in a blog post.
The aim, supporters of the concept have said, is to allow consumers to easily transfer their financial information from one institution to another.
Backstory and Context
Chopra’s announcement came as he prepared to spend two days on Capitol Hill testifying in the Senate and House on the bureau’s activities during the past six months.
In the blog post, Chopra said the CFPB will formalize an unused legal authority enacted by Congress in 2010.
“This authority gives consumers the right to control their personal financial data,” he wrote. “These rights will become a practical reality after the CFPB implements a rule that sets expectations for the market.”
Timeline for the Proposal
He said the agency will have to resolve certain core issues because system participants are deadlocked or because existing approaches do not place consumers in charge of their data.
He added, however, that many of the details in open banking will be handled by standard-setting outside the agency.
“Properly pursued, such standards can allow open banking to evolve as new technologies emerge, new products develop, and new data security challenges arise,” the post reads.
Chopra noted further that the agency will monitor any attempts to limit consumers’ exercise of their data rights.
He said the agency will unveil its proposal in the next few months and that he expects to finalize it next year.
Inside the Hearing
On Tuesday, Chopra appeared before the Senate Banking Committee, where, as often is the case, Republicans criticized his regime and Democrats supported it.
“Under Director Chopra’s leadership, the CFPB is back to doing its job—standing up to bad actors, protecting people’s paychecks and savings, helping working families keep more of their money,” Senate Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, said.
And Brown referenced the lawsuit challenging the CFPB’s funding because it does not go through the annual appropriations process.
“This lawsuit is a half-baked, bad-faith, dangerous legal ploy to do through the courts what Wall Street and their congressional allies couldn’t get done any other way: get the CFPB off their back,” he said.
On the other hand, Senate Banking Committee ranking Republican Sen. Tim Scott of South Carolina was far less supportive of the agency, accusing Chopra of regulating through blog posts and speeches.
He said the agency’s actions will “provide less credit for those who need it most.”
Most of the questioning was cordial, although Sen. John Kennedy, R-La., blasted the CFPB’s proposal to collect information on small business lending to women- and minority-owned businesses. He said that the proposal would even require financial institutions to ask a person’s sexual preference.
“Who made you Pope?” Kennedy asked Chopra, who did not answer the question.
In advance of the hearing, Greg Mesack, NAFCU’s senior vice president of government affairs, sent a letter to committee members outlining issues the trade group wanted addressed during the hearings.
Mesack wrote that NAFCU believes the CFPB should use its statutory authority to exempt credit unions from rules that may be applicable to other financial institutions.
He added that in developing any data-sharing rule, the bureau should avoid any plan that would limit credit unions’ existing discretion to define the type of data sharing most beneficial to their members.
“It is unlikely that Congress intended to grant the CFPB sweeping authority to promote fintech data access privileges when it passed the Dodd-Frank Act,” he wrote.
What Comes Next?
On Wednesday, Chopra is scheduled to testify before the House Financial Services Committee—a panel that includes many of his most vociferous critics.