CFPB Rule 1033: Consumer Choice & Protection
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CFPB Faces Pressure to Preserve Data Sharing Ecosystem in New Rulemaking on Consumer Financial Data Rights
Table of Contents
Updated November 22, 2023
The Consumer financial Protection Bureau (CFPB) is navigating a complex rulemaking process concerning consumer access to and control over their personal financial data, as mandated by Section 1033 of the Dodd-Frank Act. Recent commentary from key House Financial Services Committee members signals a desire to ensure the new regulations foster innovation and maintain the current ecosystem of financial data portability, rather than disrupting it. This article breaks down what’s happening, why it matters, who’s involved, and what to expect next.
What is Section 1033 of the Dodd-Frank Act?
Section 1033 of the Dodd-frank Wall Street Reform and Consumer Protection Act, enacted in 2010, directs the CFPB to establish rules enabling consumers to access and authorize access to their financial account facts held by financial institutions. The goal is to empower consumers to easily share their data with third-party providers, fostering competition and innovation in financial services. This is often referred to as “open banking” or “data portability.”
[[[[Expand Here: Briefly explain the context of Dodd-Frank and why Section 1033 was included. Link to a more detailed description of the Act.]
The Current Rulemaking Process & CFPB’s Advanced Notice
In[InsertDateofANPRRelease-[InsertDateofANPRRelease-[InsertDateofANPRRelease-[InsertDateofANPRRelease-Research Needed], the CFPB issued an Advanced Notice of Proposed Rulemaking (ANPR) seeking public input on key aspects of implementing Section 1033. The ANPR covered a wide range of topics, including:
* Consumer authorization: How consumers can securely and effectively authorize third parties to access their data.
* Data Security: Standards for protecting consumer financial data during transmission and storage.
* Scope of Data Covered: What types of financial data will be included under the rule.
* Third-Party Access: The rights and responsibilities of third-party data aggregators and service providers.
[[[[Expand Here: Link to the actual ANPR document. Summarize the key questions the CFPB posed in the ANPR.]
Concerns from House Financial Services Committee
Reps.French Hill (R-AR) and Bill Huizenga (R-MI), Chairman and Vice Chairman of the House Financial Services Committee, respectively, expressed concerns in a letter to the CFPB dated November 14, 2023. They urged the agency to proceed cautiously, emphasizing the importance of preserving the existing ecosystem of consumer financial data portability.
Specifically, Hill and Huizenga argued that the CFPB should:
* Allow a Broad Range of Third Parties: The rules should not restrict consumers’ ability to authorize both fiduciary and non-fiduciary third parties to access their data. (A fiduciary has a legal obligation to act in the consumer’s best interest.)
* Avoid Disrupting Existing Innovation: The rulemaking should not “upend” the current system, which has fostered innovation in financial products and services.
* Consider the Gramm-Leach-bliley Act: The representatives suggested the CFPB consider the privacy and security standards established by the Gramm-Leach-Bliley Act as a potential framework for the new rules.
[[[[Expand Here: Include a quote directly from the letter. Explain the implications of allowing both fiduciary and non-fiduciary access. What are the risks