CFPB sets process to recognize open banking standards setting body

The CFPB yesterday announced it has finalized a rule outlining the qualifications for becoming a recognized industry standard setting body that can issue standards that companies can use to help them comply with the CFPB’s upcoming Personal Financial Data Rights Rule. The new rule identifies the attributes that standard setting bodies must demonstrate in order to be recognized by the CFPB. The rule also includes a step-by-step guide for how standard setters can apply for recognition and how the CFPB will evaluate applications.

The CFPB is working to accelerate the shift to open banking in the United States. In 2010, Congress passed into law new personal financial data rights for consumers. Guaranteeing a consumer’s right to their data will open up more opportunities for smaller financial institutions and startups offering products and services. However, these new rights have not taken full effect, because the CFPB never issued a rule. In October 2023, the CFPB proposed a rule to implement these rights and will finalize it in the coming months.

As part of the upcoming Personal Financial Data Rights rule, the CFPB expects to allow companies to use technical standards developed by standard-setting organizations recognized by the CFPB. The final rule announced yesterday kicks off the process for standard-setting organizations to seek formal recognition. It also includes a mechanism for the CFPB to revoke the recognition of standard setters and a maximum recognition duration of five years, after which recognized standard setters will have to apply for re-recognition. These protections will ensure recognized standard setters’ ongoing adherence to the attributes codified in the rule.

UPDATE 6/11/2024: The final rule was published at 89 FR 49084 in the Federal Register on 6/11/2024. It will become effective July 11, 2024.