The American Bankers Association (ABA) has highlighted issues in the Consumer Financial Protection Bureau’s (CFPB’s) proposed data sharing rule.
The CFPB’s proposed rule would forbid financial institutions from “hoarding” a person’s data and require companies, at the individual’s direction, to share data with other companies offering potentially better products.
It would also allow people to “break up” with banks that provide bad service and prohibit companies that receive data from misusing or wrongfully monetizing sensitive personal financial data.
ABA urged CFPB to provide transparency around what types of accounts fall under the rule and the information data providers are required to share, as well as addressing the question of liability if something goes wrong.
It also said it was “concerned with the significant implementation costs our members will face”.
ABA said in a statement: “We firmly believe that other entities that are granted access to consumers’ data must be held not only to the same high standards but also to the same level of supervision related to data security, privacy, and consumer protection that banks must meet every day.”
However, the ABA welcomed news that the proposed rule clarified nonbanks’ obligations to protect customer privacy and praised CFPB for contemplating a move away from screen scraping, a method of data sharing that has been criticized by ABA as insecure.
CFPB argues that rule would further the banking industry’s shift toward Open Banking, a system where consumers have control over their financial data.
CFPB Director Rohit Chopra said: “With the right consumer protections in place, a shift toward open and decentralized banking can supercharge competition, improve financial products and services, and discourage junk fees.”
He emphasized the importance of an industry standard on data sharing, as people’s access to their financial data is currently inconsistent from one institution to another.