RSSThe Consumer Financial Protection Bureau will reportedly systematize requirements for open banking standards-setting organizations to ensure the requirements are fair.
Speaking March 13 during a global data summit, CFPB Director Rohit Chopra said standard-setting organizations must be “fair, open and inclusive” to be recognized by the bureau. Once those attributes are finalized, the CFPB will invite standards-setting bodies to seek formal recognition.
“We will look closely at the makeup of the board or group that makes determinations with respect to the setting or modification of standards,” Chopra said. “We’ll be looking at your funding structure. If the composition suggests favoritism or if funding is dominated by one market participant, that will be a problem. Additionally, if there is no meaningful way for consumer privacy interests or the interests of small firms to be considered, that might also be a problem.”
The CFPB has been undertaking rulemaking on the data-sharing rule under Section 1033 of the Dodd-Frank Act. The open banking rule, which is expected to be finalized this fall, would require large institutions — banks, credit unions and other companies that hold consumer accounts — to allow customers to request their financial data held with fintechs, other banks and online lenders. Under Section 1033, firms will not be able to use financial data for algorithms for activities such as targeted advertising and marketing. Companies would also be banned from monetizing the data by selling the information to data brokers following the customer-permissioned service.
