In A Surprising Switch, CFPB Now Seeks To Rewrite Open Banking Rule

On July 29, the U.S. District Court for the Eastern District of Kentucky granted the CFPB's request to stay litigation challenging its open banking rule. The rule (previously discussed here) aimed to establish industry-wide standards for data access and sharing between banks, fintechs, and consumers. The Bureau stated that it intends to revise the rule through an accelerated rulemaking process.

Finalized in October 2024, the rule was designed to implement Section 1033 by requiring financial institutions to provide consumers and third parties authorized by consumers with access to account information through secure, standardized APIs. Shortly after it was finalized, the rule was met with a lawsuit by banking groups alleging that the CFPB exceeded its statutory authority and unlawfully compelled data sharing with non-fiduciary entities. Under new CFPB Acting Director Russ Vought, the CFPB disavowed the rule, declaring it unlawful.