Go-To Guide:

• Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra delivered a keynote address at the Financial Data Exchange Global Summit and reiterated that the CFPB plans to finalize its proposed Personal Financial Data Rights Rule this fall.
• In addition to finalizing the proposed rule, Director Chopra stated that the CFPB is actively laying the groundwork for recognizing standard-setting organizations and, before finalizing the proposed rule this fall, intends to codify the attributes that standard-setting organizations must demonstrate to be recognized under the proposed rule.

On March 13, at the Financial Data Exchange Global Summit, CFPB Director Rohit Chopra delivered a keynote address that focused on “the role of standard setters and standard-setting” as the CFPB pushes towards finalizing is its proposed Personal Financial Data Rights Rule (see October 2023 GT Alert). The proposed rule and discussion on standard-setting are all part of the CFPB’s goal to move the United States away from what Chopra described as the current “clunky system” to “open banking” where consumers are more seamlessly able to switch financial products and providers by having greater control over their data.

In his keynote, Chopra noted the importance of standard-setting in ensuring that an industry is open and interoperable and said that the CFPB is thinking through how best to set relevant industry standards in connection with the proposed rule that an organization must meet to be recognized by the CFPB, particularly data standards and sharing protocols. Chopra also warned of the dangers that “exist when more powerful players weaponize industry standards,” and noted that “[w]e have to be vigilant that standard-setting does not skew to benefit dominant firms and their prevailing market power.”

Notably, Director Chopra emphasized in his remarks that the CFPB is considering multiple attributes for standard-setting organizations seeking to be recognized by the CFPB and urged “all interested standard setters in this space to look hard at their practices and procedures to ensure your organization is not simply a puppet for a powerful player.”

Takeaways

As the CFPB prepares to finalize its proposed Personal Financial Data Rights Rule, Director Chopra’s remarks make clear that the CFPB continues to see increased competition in the consumer financial services industry as a key step in bettering the market for consumers, and codifying the attributes that an organization must meet to be recognized by the CFPB is another step toward this goal.

But like the proposed rule, these codified attributes would also create a new and potentially burdensome regulatory regime. Looking ahead, covered financial services providers and prospective standard-setting organizations should closely examine the proposed rule ahead of it being finalized this fall, consider whether it would create business opportunities or risks, and consider whether current technology and operations-directed investments would facilitate compliance with the proposed rule.

Zeba Pirani also contributed to this article.