WASHINGTON—The Consumer Financial Protection Bureau’s open banking proposal doesn’t go far enough to protect sensitive consumer financial data, the Bank Policy Institute and The Clearing House have told the Bureau in a comment letter.
As CUToday.info reported, the CFPB, which just closed its comment period for the proposed rule, unveiled the long-awaited proposal in October. The consumer watchdog claims the rule will give consumers greater control over their financial data by requiring banks to share such data with third parties like fintechs, as CUToday.info reported here when Director Rohit Chopra addressed its plans during a meeting in 2022.
To comply with the rule, banks would be required to make personal financial data available at no charge to consumers through “safe, secure, and reliable” digital interfaces, the CFPB said.
However, groups the include the BPI and TCH are stating the rule should apply not just to banks, but to all third parties and data aggregators, as well as to all data, Banking Dive noted.
‘We Welcome the Competition’
“Our members welcome the competition brought about by innovative financial technology firms and are prepared to support the ability of bank customers to connect their bank accounts to the third-party apps of their choice, but such competition cannot come at the expense of data security,” the associations wrote in their letter. “It is critical that consumers’ personal and financial information remains secure when it is shared between financial institutions and third parties and when it is stored outside of the financial institution.”
The proposal seeks to move the market away from screen scraping, a practice the CFPB and some industry stakeholders have labeled a “risky data collection practice,” Banking Dive added.
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