Establishing the process for recognizing data-sharing standards to comply with an upcoming “open banking” rule is the aim of final rule issued Wednesday, the federal consumer financial protection agency said.
The Consumer Financial Protection Bureau (CFPB) said the rule identifies the attributes that standard setting bodies must demonstrate to be recognized by the agency. The rule also includes a step-by-step guide for how standard setters can apply for recognition and how the bureau will evaluate applications, the agency said.
The agency asserted in a release that consensus standards issued by recognized standard setters “can help put the Personal Financial Data Rights rule into action and accelerate the financial system’s movement towards truly open banking.”
The Personal Financial Data Rights rule, proposed last fall, would require depository and nondepository entities to make available to consumers and authorized third parties certain data relating to consumers’ transactions and accounts. The proposal, the agency said then, would also establish obligations for third parties accessing a consumer’s data, including privacy protections for that data, provide basic standards for data access, and promote “fair, open, and inclusive industry standards.”
The rule issued Wednesday, according to the bureau, launched the process for recognizing open banking standards.
The rule is also aimed, the agency said, at preventing “dominant incumbents from squelching startups.” The rule does that, CFPB said, by giving the agency power to revoke the recognition of standard setters and set a maximum recognition duration of five years, after which recognized standard setters will have to apply for re-recognition.
“These protections will ensure recognized standard setters’ ongoing adherence to the attributes codified by the CFPB today,” the agency said. “The rule also contains a step-by-step guide to help interested standard setters apply for recognition. The guide describes five steps in the application and recognition process, and the CFPB invites interested standard setters to begin engaging with us when they are ready to demonstrate their adherence to the attributes the CFPB codified today.”
The agency said prospective standard setters must apply to the bureau display the attributes of openness, transparency, balanced decision-making, consensus and due process and appeals.