CFPB moves to withdraw open banking rule
Depleted agency filed status report on open banking in court May 23
The Consumer Financial Protection Bureau’s new leadership has been pulling back, and the latest retreat is likely to affect open banking, also known as Section 1033.
In a court filing May 23, bureau leadership said the open banking rule is “unlawful and should be set aside.”
Section 1033, which was finalized Oct. 22, was intended to govern how consumer financial data could be transferred and accessed.
It is unclear what aspect of the rule the bureau deems unlawful, Kim Phan, partner in the Washington, D.C., office of Troutman Pepper Locke, told Bank Automation News.
“We just don’t know what their reasons are yet,” said Phan, whose practice is focused on privacy, data security and regulatory compliance.
The pullback on open banking is the latest change announced by the Consumer Financial Protection Bureau (CFPB) following President Donald Trump’s inauguration in January.
For example, in April, the CFPB issued let more than 1,400 employees go, leaving the agency with roughly 300 employees.
The staff reduction itself is reason for concern over the CFPB’s latest moves, Phan said.
“To do the things they have stated they want to do, like withdrawing this rule, they just need people,” she said.
Because this is a final rule, the only way to withdraw it is to submit a notice in the Federal Register, provide an opportunity for public comment, take those comments and issue a withdrawal later, Phan said. “You need staff to do that.”
The rule is not set aside yet, she said, noting this is just the beginning of the process.
According to the court filing, defendants intend to file a motion for summary judgments by May 30.
