In a move that is expected to accelerate the shift towards “Open Banking”, the Consumer Financial Protection Bureau (CFPB) issued its highly anticipated notice of proposed rulemaking on October 19th. This move is designed to implement Section 1033 of the Dodd-Frank Act otherwise known as the Personal Financial Data Rights Rule.
Under the proposed rule, both depository and non-depository entities, including providers of payment facilitation services, would be required to make available to consumers and authorized third parties, certain data related to the consumers’ accounts. This proposed regulation represents a significant stride in giving consumers more control over their financial data.
The move is part of a larger global trend towards increased transparency and access in the financial services sector. As financial technology continues to evolve and traditional banking methods become increasingly digitized, the safeguarding and sharing of personal financial data has come under greater scrutiny.
The stipulations of the proposed rule serve to enhance customer rights to financial data, a development, that if enacted, could have far-reaching implications for corporates and law firms alike especially around compliance, data management practices, and customer relationship management.