The Consumer Financial Protection Bureau is soliciting financial services stakeholders to help form a framework for sharing data ahead of open banking in the United States. 

The CFPB on June 5 finalized a rule outlining which entities qualify as acceptable “standard setters” to include nine or fewer financial organizations, consumer advocates, small companies and large financial institutions, according to a report published June 5 on the bureau’s website.

Banks, credit unions, electronic funds transferers and consumer protection institutions are among those that can apply for the role. 

The bureau will look for the following attributes when it comes to selecting the standard setters, according to the announcement: 

• Openness about data sharing with consumer protection, civil rights and financial services bodies; 
• Balance in decision-making processes pertaining to all interested parties,
  including consumer and other public interest groups; 
• Due process and appeals when it comes to using documentation and publicly
  available policies and procedures; 
• Consensus in developing open banking framework with impartial, open and transparent processes; and 
• Transparency in standards development process is publicly available. 

Aryeh D. Derman, senior counsel at international law firm Clark Hill, told Bank Automation News that “the CFPB is now invested in selecting standard setters that will carry forward the Bureau’s mission as outlined in their proposed rules for implementing Section 1033” that came out last year.

Illusion of choice 

Federal agencies must involve private sector leadership in development of industry standards, according to Article A-119 of Office of Management and Budget. By asking the financial services industry to contribute to the 1033 rule making, the CFPB is fulfilling its regulatory duty, Derman said. 

“This is a very procedural step in the process to … give the illusion of choice and make the industry feel like they are truly an applicant for standard setters,” Derman said. “I think they’re going to be looking at standard setters to rubber stamp what they already envision.” 

The CFPB is not really looking for industry expertise but rather “looking for a standard setter to implement what they laid out in October’s proposed rulemaking,” Derman said. 

Among major financial institutions “the rules internally differ quite a bit in terms of how [data] is stored, provided and can be requested,” and the CFPB is looking to standardize those rules for the industry, Derman said. 

However, he pointed out that while the CFPB is looking for input from the financial services industry, the bureau has “not devoted much ink” to small businesses that might eventually be impacted by the rule’s adoption.