Consumer Financial Protection Bureau (CFPB) has proposed a rule that would accelerate a shift toward open banking in the US. The proposed Personal Financial Data Rights rule would forbid financial institutions from hoarding a person’s data. The proposed rule would allow people to depart banks that provide bad service and would forbid companies that receive data from misusing or wrongfully monetising sensitive personal financial data.
Under the proposed Personal Financial Data Rights rule, people would have the power to share data about their use of checking and prepaid accounts, credit cards, and digital wallets. This would allow them to access competing products and services without worrying that their data might be collected, used, or retained to serve commercial interests over their own. People could be certain that their data would be used only for their own preferred purpose and not for financial institutions or tech companies to use for their own gain.
Benefits of the proposed rule
The proposed rule would ensure that consumers get their data free of junk fees, have a legal right to share their data and have the ability to walk away from bad service. The rule would protect the interests of both consumers and financial firms by providing robust protections to prevent unchecked surveillance and misuse of data, meaningful consumer control, a move away from risky data collection practices and fair industry standard-setting. Currently, there has been no official action taken on the back of the CFPB’s proposal but could be seen soon.
CFPB Director Rohit Chopra: “With the right consumer protections in place, a shift toward open and decentralised banking can supercharge competition, improve financial products and services, and discourage junk fees. We are proposing a rule to give consumers the power to walk away from bad service and choose the financial institutions that offer the best products and prices.”
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