The Consumer Financial Protection Bureau has finalised a rule outlining the qualifications to become a recognised industry standard setting body. In turn, they can issue standards that companies can use to help them comply with the CFPB’s upcoming Personal Financial Data Rights Rule.

The rule identifies the attributes that standard setting bodies must demonstrate in order to be recognised by the CFPB. The rule includes a guide for how standard setters can apply for recognition and how the CFPB will evaluate applications.

“Industry standards can be weaponised by dominant firms in order to maintain their market position, undermining competition for all,” said CFPB Director Rohit Chopra. “Today’s rule will prevent these firms from rigging standards in their favour by identifying attributes the CFPB will use to recognise standard setters.”

CFPB aims to accelerate the shift to open banking in the US

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 finalise 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 organisations recognized by the CFPB.

The new rule identifies the attributes that standard setters must demonstrate in order to be recognised by the CFPB.

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To be recognised, the standard setters must apply to the CFPB and display attributes of openness, transparency and balanced decision-making. In addition, standards development must proceed by consensus, though not necessarily unanimity. Comments and objections must be considered using fair and impartial processes, says the CFPB.

The standard-setting body must also employ a fair and impartial process for resolving conflicting views. An appeals process is also available for the impartial handling of procedural appeals.