CU Trades Strongly Oppose CFPB Plan to Expand Access to Consumer Data
CUNA, NAFCU cite both security and cost concerns for credit unions in pushing back against proposal.
The CFPB’s proposal to grant consumers more access to their financial records is risky and would be extremely costly to credit unions, industry trade groups told the agency last week.
Instead of giving consumers more freedom to choose financial institutions, it would, instead, provide third parties the incentive to convince unwary consumers to give them access to their data, the groups said.
“In the absence of a national federal data security standard and national data privacy standards, granting entities who are not subject to substantially similar laws and regulations broad data access privileges would be irresponsible,” Andrew Morris, NAFCU’s senior council for research and policy, told the agency in a letter. “Credit unions who have earned the trust of their members by investing in security should not be forced to undermine their efforts by unconditionally accommodating third party access privileges.”
The CFPB’s Proposal
In an October speech, CFPB Director Rohit Chopra said any proposal would allow consumers to easily transfer their accounts to another financial institution.
“While not explicitly an open banking or open finance rule, the rule will move us closer to it, by obligating financial institutions to share consumer data upon consumer request, empowering people to break up with banks that provide bad service, and unleashing more market competition,” he said at the time.
Pushback From Credit Union Groups
But Morris said that without changes, the proposal would unfairly burden credit unions with compliance costs, adding that credit unions also would be required to subsidize third-party access by maintaining access portals.
“Ordinarily it would take a financial company many years to acquire a historically significant amount of customer data of the type and quality that is maintained by credit unions,” he wrote.
He further recommended that credit unions should be permitted to assess the trustworthiness of any third-party that wants access to data.
CUNA also panned the proposal in a separate letter.
“One of the most common refrains heard from credit unions when discussing this proposal is that the cost estimates and timelines for implementation presented by the Bureau are vastly understated for this type of endeavor,” wrote Madison Rose, the trade group’s director of advocacy and counsel for payments and technology.
Rose also noted that most internal systems that house consumer data were not designed to easily share that data.
“Credit unions, system partners, and core providers are currently unable to provide exact timelines or cost estimates because they do not have a clear proposal,” she said.
Support From Consumer Organization
However, Noemi Altman, senior survey research advisor at Consumer Reports, said a rule governing access to financial data would help those who need it the most.
“It can expand access to credit to many creditworthy Americans who are excluded by the credit reporting system’s outdated mechanisms,” Altman wrote, in another comment letter to the CFPB.