The proposed rule would bar financial firms from “hoarding” a consumer’s data.
“With the right consumer protections in place, a shift toward open and decentralized banking can supercharge competition, improve financial products and services, and discourage junk fees," said CFPB Director Rohit Chopra . | Andrew Harnik/AP
It comes against the backdrop of a yearslong power struggle between traditional banks and fintech startups over the way consumer data is shared as more people use apps offering payment and budgeting services. The CFPB is trying to standardize the patchwork data-sharing system that has arisen in response.
Banks would be required to make personal financial data available to consumers free of charge, and companies that access a person’s data would not be able to use it for targeted advertising. Access to a person’s data would have to be reauthorized annually, and consumers would have the right to revoke access at any time.
“With the right consumer protections in place, a shift toward open and decentralized banking can supercharge competition, improve financial products and services, and discourage junk fees,” Chopra said. It would also allow industry to continue to negotiate technical standards around data sharing. Financial firms have been negotiating standards for data fields at a forum known as Financial Data Exchange. The proposal says a standard-setting body must be “fair, open and inclusive,” and include a diverse set of actors.
“Many of these entities that are collecting, storing, and selling this consumer information are not subject to the same rigorous data security and privacy standards as well-regulated and supervised financial institutions,” CBA President Lindsey Johnson said.
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