In his first public comments following last week’s ruling from the Fifth Circuit Court of Appeals, Rohit Chopra, the director of the Consumer Financial Protection Bureau, not only chose not to mention the ruling in any way, shape, or form, but announced that the Bureau is planning to move forward this week with a rule that has the potential to reshape how companies compete in the financial services industry.
Speaking in Las Vegas at the Money 20/20 conference, Chopra announced that the CFPB is launching a rule that moves consumers closer to the concept of open banking by obligating financial institutions to share consumer data upon request and empowering consumers to be able to “break up” with banks that provide poor customer service more easily.
Chopra never addressed the ruling last week from the Court of Appeals for the Fifth Circuit that determined the funding structure for the CFPB is unconstitutional.
The plan is for the CFPB to release a discussion guide this week that small businesses can comment on, similar to the SBREFA process that the Bureau went through when developing Regulation F. The CFPB will take the comments it receives and issue a report in the first quarter of 2023, Chopra said. A proposed rule will follow later in the year, with the plan to issue a final rule in 2024.
Banks will be required to offer data sharing, via APIs, for deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts first, followed by stopping banks from improperly restricting access when consumers seek to control and share their data, Chopra said.
“In consumer financial services, we have a number of highly concentrated submarkets: the credit reporting conglomerates, the card networks, the core processors, and more,” Chopra said. “It’s critical that no one ‘owns’ critical infrastructure.”