The Consumer Financial Protection Bureau has approved Financial Data Exchange (FDX) as the first standard setting body for the regulator’s new open banking regime.
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In October, the CFPB issued its Personal Financial Data Rights rule, requiring financial institutions, credit card issuers, and other providers to unlock an individual’s personal financial data and transfer it to another provider at the consumer’s request for free.
To help with the rollout, the regulator established a formal application process outlining the qualifications to become a recognised industry standard setting body, which can issue standards that companies can use to help them comply with the rule.
FDX – which has over 200 members and works to improve and maintain a common, interoperable standard for secure consumer and business access to financial records – has now cleared the application process.
The approval is subject to conditions.
Amid concerns that the big banks will dominate the process, the CFPB has previously warned that it will “not recognise any standard-setting organisation that is rigged in favour of any set of industry players”.
FDX’s approval is on condition that there is a ban on ‘pay-to-play’ and other conflicts of interest; the group provides mandatory reporting to the CFPB on market adoption; and FDX makes freely available to the public any consensus standards that it adopts and maintains, subject to reasonable safeguards, and to ensure that non-members have the same access as members do.
The new rule is facing pushback from some quarters: In October, The Bank Policy Institute and Kentucky Bankers Association filed a lawsuit against the CFPB, alleging that the regulatory agency overstepped its authority on the release of new open banking rules
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