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CFPB warns big firms on efforts to control open banking standards

CFPB warns big firms on efforts to control open banking standards

As it prepares to introduce a personal data rights rule, the Consumer Financial Protection Bureau has warned that it will not allow big banks to skew open banking standards in their favour.

Encouraged by the White House, the CFPB has been working to formalise an unused legal authority enacted by Congress in 2010 that gives consumers the right to control their personal financial data.

The bureau says that accelerating the shift to open banking through a new personal data rights rule - set to be finalised next year - can help jumpstart competition, and protect financial privacy.

In a blog, CFPB director Rohit Chopra insists that the agency will not "micromanage" open banking and that many of the details will handled through standard-setting outside of it.

However: "To thrive, standard-setting organisations must not skew to the interests of the largest players in the market. They must reflect the full range of relevant interests — consumers and firms, incumbents and challengers, and large and small actors.

"In consumer finance, powerful firms have sometimes looked to manage emerging technologies through utilities, networks, or standard setting organisations skewed to their interests - or even owned by them.

"Control of the open banking system by such players threatens competition and the consumer’s control of their own financial affairs.

"While the CFPB intends for the market to play a significant role in developing and maintaining open banking standards, it will pay close attention to any attempts to limit consumers’ exercise of their data rights, particularly where such attempts proceed from coordinated efforts by dominant firms."

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