Open banking rule puts consumer data at risk

The CFPB’s open banking rule puts consumer data at risk and should be rescinded as the CFPB intends. In response to fintech organizations writing the administration urging it to uphold the rule, America’s Credit Unions President/CEO Jim Nussle wrote to President Donald Trump Friday highlighting numerous concerns with the rule.

The rule would require financial institutions with more than $850 million in assets to provide access to certain consumer data upon receiving a request from an authorized third party. The bureau indicated in May the rule—proposed and finalized under the previous administration—is “unlawful and should be set aside.”

“Your Administration’s instinct to question and ultimately vacate and rewrite this rule is not only justified, but also essential for protecting consumers and preserving fair competition. When the legality of the CFPB’s 1033 rule was challenged in court, your Administration did the right thing by recognizing the rule’s flaws and agreeing it should be vacated and revisited,” the letter reads. “America’s Credit Unions supports your Administration’s  continued position to vacate and rewrite the rule.”

The letter also notes the rule would: 

• Undermine genuine competition and consumer choice, especially in communities served by credit unions and smaller banks;
• Impose massive new costs and burdens on institutions like ours, far beyond anything Congress intended in Section 1033 of Dodd-Frank; and
• Result in higher costs and less access for consumers due to enormous new technology expenses that cannot be shared with the third-party users of their data.

America’s Credit Unions also signed onto a joint statement with other financial services trade organizations addressing several falsehoods in the fintech organizations’ letter, and noting that the legal and practical concerns raised are why the administration decided to rescind the rule. 

Read the full letter here and the joint statement here.