CFPB’s App Process for Open Banking Standard-Setting Bodies

The Consumer Financial Protection Bureau (CFPB) recently issued a partial final rule establishing the qualifications that organizations must meet to become recognized standard-setting bodies under the CFPB’s proposed financial data-sharing rule which would implement Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

According to the CFPB’s announcement, this partial rule kicks off the process for standard-setting organizations to seek formal recognition.

The new rule identifies the attributes that standard setters must demonstrate in order to be recognized by the CFPB. Consensus standards issued by recognized standard setters can help put the Personal Financial Data Rights rule into action and accelerate the financial system’s movement towards truly open banking.

To be recognized by the CFPB, the standard setters must apply to the CFPB and display the following attributes:

• Openness: The CFPB will not recognize any standard-setting organization that is rigged in favor of any set of industry players. The process must be open to all interested parties, including public interest groups, app developers, and a broad range of financial firms with a stake in open banking.
• Transparency: Procedures must be transparent to participants and publicly available.
• Balanced decision-making: The decision-making power to set standards must be balanced across all interested parties, including consumer and other public interest groups. There must also be meaningful representation for large and small commercial entities. No single special interest can dominate the decision-making process.
• Consensus: Standards development must proceed by consensus, though not necessarily unanimity. Comments and objections must be considered using fair and impartial processes.
• Due process and appeals: The standard-setting body must use documented and publicly available policies and procedures, provide adequate notice of meetings, sufficient time to review drafts and prepare views and objections, access to views and objections of other participants, and a fair and impartial process for resolving conflicting views. An appeals process is also available for the impartial handling of procedural appeals.

The CFPB is currently in the process of finalizing the remaining portions of its proposed rulemaking to address electronic access to financial data by consumers and their agents.

In December 2023, the California and Nevada Credit Union Leagues submitted a comment letter to the CFPB outlining concerns surrounding the CFPB’s proposed rule.

Read more.

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