The Consumer Financial Protection Bureau (CFPB) has outlined cross-sector standards for the burgeoning US Open Banking scene, which it is seeking to further develop and cultivate.
The Bureau is specifically looking to identify what it calls “standards setters” ahead of the implementation of the Personal Financial Data Rights Rule later this year. These standards setters will have ideal attributes in order to be recognised by the CFPB.
The CFPB states that its announcement of standards forms part of its efforts to accelerate the shift towards Open Banking in the US. The regulator intends to build on legislative foundations laid by Congress back in 2010 covering personal financial data rights, which have not yet come into effect.
In October 2023, the CFPB introduced a rule to implement these rights, and the publication of standards this week forms part of efforts to finalise this rule.
“Industry standards can be weaponized by dominant firms in order to maintain their market position, undermining competition for all,” said CFPB Director, Rohit Chopra.
“Today’s rule will prevent these firms from rigging standards in their favour by identifying attributes the CFPB will use to recognise standard setters.”
The CFPB has outlined five attributes for recognised standards setters – openness, transparency, balanced decision-making, consensus and due process and appeals.
Openness means that the CFPB will not recognise standard-setting organisations rigged in favour of any set of industry stakeholders, and the similar attribute of transparency will require procedures to be made publicly available and accessible to participants.
The CFPB adds that balanced decision making standards must ensure balance across all interested parties, including consumer and other public interest groups. The Bureau asserts that “no single special interest can dominate the decision-making process”.
Lastly, the CFPB states that standards development must proceed by consensus and regarding due process and appeals, standards setters must use documented and publicly available policies and procedures and plan accordingly for this.
The standards mark another step forward in the development of the US’ Open Banking framework, a process which is being mirrored in other countries such as Australia, India and the UK.
