CFPB receives nearly 14,000 comments on open banking revamp proposal

The Consumer Financial Protection Bureau received nearly 14,000 comments on its proposed revamp of Section 1033 before the Oct. 22 public comment deadline, according to a public database. .Wyoming Sen. Cynthia Lummis, a member of the Senate Banking Committee, supported Section 1033, calling it “a bright spot” in the broader 2010 Dodd-Frank Act. Section 1033 increases consumer choice and benefits local communities, she added. “Open banking is critical to integrating digital assets into our economy by promoting competition and allowing consumers to provide their data to digital asset exchanges and stablecoin issuers to facilitate faster and cheaper payments,” she added. In another statement to the bureau, tech giant Apple expressed positive views on Section 1033 but also called on the CFPB to ensure it “does not sacrifice user privacy in the course of enabling user access.” “The bureau should take care that rules under Section 1033 do not impose obligations on technology providers like Apple that do not maintain consumer financial accounts, but do offer privacy-forward services that store data on devices or in other locations that they cannot even access,” Apple wrote. “Sweeping in providers of pass-through digital wallets and other entities that do not own or control — or even have access to — underlying data through ‘one-size-fits-all’ rules will undercut the aims of creating an efficient and trustworthy data ecosystem.” The revamp is being proposed after the original rule was finalized last year under the Biden administration. Under the original rule, financial institutions, credit card issuers and other financial institutions would have been required to transfer consumers’ personal financial data to another provider for free at the consumer’s request. The rule also required personal financial information to only be used for reasons authorized by the consumer. Section 1033 banned “screen scraping,” when consumers provide their account passwords to third parties which then use the information to access data through online banking portals. On the same day the rule was finalized, the Kentucky Bankers Association, Bank Policy Institute and Lexington, Ky.-based Forcht Bank filed a lawsuit in a Kentucky-based federal court alleging the CFPB exceeded its statutory authority by requiring data sharing with nonbanks. In May, the CFPB filed a motion for summary judgement to vacate Section 1033. Two months later, the CFPB requested a stay of the lawsuit and announced it would start a new rulemaking process to change the rule. Both the American Bankers Association and Independent Community Bankers of America criticized Section 1033 after it was finalized. Though the ICBA said it supported consumers being able to access their financial data and share it with third parties, the association was concerned about the impact of Section 1033 on data security and impact on community banks. The association supported an exemption for banks with fewer than $850 million in assets.