Fintech Association Offers Moderate Stance in Dispute with CFPB over Proposed Open Banking Regulation
In a significant move, the American Fintech Council (AFC) has filed an amicus brief in support of the Consumer Financial Protection Bureau's (CFPB) new rule on the open banking ecosystem. The rule, which aims to empower consumers and enable innovation, has been met with both support and opposition.
The AFC, which represents a diverse group of smaller banks, credit unions, and fintech companies, believes that the open banking rule offers clear guidance without overreach. Ian P. Moloney, SVP and head of policy and regulatory affairs at AFC, has stated that the rule delivers tools for consumers and regulatory certainty for fintech companies.
According to AFC, consumers deserve tools that help them manage their financial lives, and the open banking rule is a step towards achieving this. The rule ensures safe, reliable access to financial data, providing clear expectations for financial institutions and third-party providers. AFC is particularly pleased with the rule's clarity around data security and third-party risk management.
However, not everyone agrees with the CFPB's approach. A coalition of financial institutions, including the Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank, has sued the CFPB over the new rule, expressing concerns about potential risks to consumers' data.
The Financial Technology Association, an intervenor in the case, is now defending the rule in court. PhilGoldfeder, CEO of the American Fintech Council, supports the CFPB's open banking rule and believes that upholding it is critical for the continued evolution of secure, competitive, and inclusive financial services.
The AFC argues that the decision not to create new liability rules and not to directly supervise all third parties was a reasonable, pragmatic approach within the CFPB's legal authority. They believe their perspective would be beneficial for the court in evaluating the competing motions for summary judgment.
The CFPB finalized its rule in October 2024, aiming to strengthen data security and improve competition in the market. Responsible fintech companies, as stated by AFC, deserve regulatory certainty, and the open banking rule is seen as a step towards achieving this.
While the exact position of the American Fintech Council regarding the Forcht Bank, N.A. et al. v. Consumer Financial Protection Bureau case remains unclear, their general support for the CFPB's efforts to promote consumer data rights and open banking, as indicated by their filing of an amicus brief in support of the CFPB's final rule on consumer data rights, suggests that they might favor the CFPB's stance on open banking.
The AFC offers a distinct middle-ground perspective, representing a diverse group of stakeholders that support open banking innovation and rely on fintech partnerships to compete. Their support for the CFPB's open banking rule underscores the potential benefits of this rule for consumers and the financial industry as a whole.
Fintech businesses, including those represented by the American Fintech Council (AFC), believe that the open banking rule offers a balanced approach, providing regulatory certainty for fintech companies and tools for consumers to manage their finances. The AFC also voices its support for the CFPB's efforts in promoting consumer data rights and open banking, which they deem crucial for the continued evolution of secure, competitive, and inclusive financial services.
