The US Consumer Financial Protection Bureau (CFPB) plans to revise the open banking regulations initially adopted under former President Joe Biden, reported Reuters.
CFPB’s decision follows a federal judge’s pause on a lawsuit aiming to strike down these regulations, allowing the agency time to replace them with a new version.
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The consumer finance watchdog, under President Donald Trump, had previously sought to scrap the rules, which were designed to enhance consumer control over financial data and foster innovation.
In a court filing, CFPB said: “In light of recent events in the marketplace, the bureau has now decided to initiate a new rulemaking to reconsider the rule with a view to substantially revising it and providing a robust justification”.
It added that it would commence an “accelerated” process for rulemaking within three weeks.
The Biden-era regulations aimed to facilitate data sharing between fintech firms and traditional banks, enabling consumers to transfer personal data freely.
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By GlobalDataThese regulations were part of the 2010 Dodd-Frank Wall Street reform legislation, intended to reduce costs and expand services for consumers.
However, the banking industry opposed the rules, citing concerns over customer privacy and data security.
Conversely, the fintech industry argued that the regulations provided security protections and that removing them would benefit large banks while hindering competition.
In May, the CFPB had informed the court that it believed the regulations exceeded its legal authority and should be scrapped.
Recently, JPMorgan announced plans to charge fintech companies for accessing its customers’ account data, a move that could significantly impact fintech operations reliant on such access.
US District Judge Danny Reeves granted the CFPB’s request for a stay, allowing the agency to collaborate with stakeholders and the public to redesign the regulations.
The Bank Policy Institute, an industry trade group, opposed the stay, while financial technology groups expressed interest in participating in the effort to remake the regulations.
