CFPB releases open banking standards

The Consumer Financial Protection Bureau (CFPB) has finalized the requirements to being a recognized industry standard-setting body.

The guidance has been released prior to the upcoming Personal Financial Data Rights Rule, in hopes of helping companies comply.

Within the rules is a step-by-step guide detailing the application process and the criteria CFPB examines before acceptance.

“Industry standards can be weaponized by dominant firms in order to maintain their market position, undermining competition for all.”

“Today’s rule will prevent these firms from rigging standards in their favor by identifying attributes the CFPB will use to recognize standard setters,”  said CFPB director Rohit Chopra.

To be recognized, four main categories have been established: transparency, balanced decision-making, consensus, and due process and appeals.

More specifically, each procedure undergone by a financial institution must be transparent to participants and publicly available.

Decisions must be balanced across all interested parties, including consumer and public groups, alongside meaningful representation for large and small commercial entities.

All standards developed must also proceed by consensus, considering objections and comments impartially.

Finally, the standard-setting body must use publicly available policies and procedures that are documented and make sufficient time for reviewing drafts and preparing views.

The CFPB passed into law new personal financial data rights for consumers, bolstering its push to open banking in the United States.

The objective of this law was to provide opportunities for smaller financial institutions through ensuring consumers’ right to their data.

Last October, the CFPB declared a ruling to implement these rights and has stated that they will be finalized in the coming months.