League Welcomes News CFPB Taking Industry Feedback into Consideration on Final 1033 Rule, But Concerns Remain on Overall Impact

In a speech on Thursday, CFPB Director Rohit Chopra said the bureau would be responsive to recommendations from the industry on the CFPB’s section 1033 proposed rule. The proposal covers consumer access to financial data and depends largely on the recognition of an organization to set a qualified industry standard to aid compliance. The proposal would require financial institutions and others to share information – at a consumer’s request and at no cost – with other businesses that offer competing products. In addition, companies would be prohibited from using consumers’ accessed data for targeted advertising, and customers would have to reauthorize access every year and would be able to revoke access at any time. This comes on the heels of the Bureau's advisory opinion last October that charging a fee for a document could stray outside of compliance with consumer requests for information.

Among the changes recommended by credit unions to the rule as proposed is for the CFPB to “recognize a qualified industry standard before advancing a final rule.”

"Well before we finalize the Personal Financial Data Rights rule this fall, we intend to codify what attributes standard-setting organizations must demonstrate to be recognized under the rule,” Chopra noted during his remarks at the Financial Exchange Global Summit.

He added that the CFPB will “look closely at the makeup of the board or group that makes determinations with respect to the setting or modification of standards. We’ll be looking at your funding structure. If the composition suggests favoritism or if funding is dominated by one market participant, that will be a problem.”

"While we welcome the news that industry feedback will factor into some aspects of the final rule, we are justifiably concerned about the rule's overall impact on credit unions," said League Chief Advocacy Officer JT Blau. "For example, while the bureau touts this rule as a means of making the marketplace more competitive for 'small' financial institutions, the reality is that we cannot overlook the challenges associated with this rule, including the significant compliance and technology costs. What's more, as we consider how the rule might affect competition, a significant portion of the greater financial services ecosystem falls outside the rule's scope, including loans and investments. While we recognize CFPB's statutory obligation to promulgate this rule, as proposed the rule poses significant challenges for credit unions."