The US Consumer Financial Protection Bureau (CFPB) has confirmed it intends to rescind the 1033 open banking rule in a new legal filing
First published in final form in October 2024, the rule would have allowed Americans to instruct their financial institutions to securely share their data with third-party providers of their choosing.
Now, less than a year later, the CFPB is signalling a complete U-turn.
The 1033 rule has been unpopular among large financial institutions due to concerns they could be held responsible for data breaches. They have also argued they should be allowed to charge for giving access to customer data.
Following President Donald Trump’s election in January 2025, these issues appear to have gained new traction. Earlier this month, reports began surfacing that Wall Street was lobbying for the rule to be amended or scrapped entirely.
The CFPB’s latest move, revealed last week, confirms those fears.
The Financial Technology Association (FTA), which has strongly advocated for open banking, criticised the decision as a step backwards for consumers.
“Vacating the 1033 rule is a handout to Wall Street banks, who are trying to limit competition and debank Americans from digital financial services,” said Penny Lee, President and CEO of the FTA.
“Americans must have the right to control their financial lives, not the nation’s biggest banks.”
Lee added the FTA will continue to defend open banking and the right of consumers to access and share their own financial data.
A future without framework
Speaking to Payment Expert earlier this month, John Lewis, CEO of Yavrio, said strong regulation is key to making open banking work in the US. The 1033 rule was seen as a crucial step, especially since countries like the UK and others in Europe are already further ahead with clear rules in place.
“Open Banking moves best when backed by robust regulation, as without a governing framework, you’re unlikely to get thousands of different banks acting in unison,” Lewis explained.
Lewis explained where the rule came from. Section 1033 of the 2010 Dodd-Frank Act gave people the right to access their own financial data. In 2021, President Biden told the CFPB to use that rule to help make it easier for people to move their financial data.
The CFPB had a plan to roll out open banking between 2026 and 2030, and many banks had already started to prepare. However, with the rule possibly being scrapped, those plans are on hold.
“There’s some political sensibility in what I might diplomatically call today’s more mercurial executive climate,” Lewis noted.
“Some banks are challenging this in the courts because they don’t want their clients to have visibility, transparency or control over their data. But the general trend is inexorable.”
While the US debates its open banking future, countries like the UK have already made significant progress. Launched in 2018, the UK’s open banking framework has created a more transparent and competitive financial system by providing consumers secure access to their financial data.
Clear and strong regulation combined with industry cooperation has allowed UK customers to use third-party apps to manage their money, compare products and make payments more easily. This has catalysed innovation, improved customer choice and boosted competition among banks and fintech firms.
