CFPB signs off on standard-setting body’s application for open-banking rule

The Consumer Financial Protection Bureau has approved the application of a company that will set standards under a new rule requiring banks, credit card issuers and other financial companies to unlock and transfer a consumer’s personal financial data to another provider upon request.

Financial Data Exchange Inc., will take on those responsibilities for the agency’s Personal Financial Data Rights rule, which was released by the CFPB in October of last year and effectively implements Section 1033 of 2010’s Consumer Financial Protection Act.

FDX, a standard-setting body operating in the United States and Canada, applied for the role in September and was officially recognized by the CFPB on Wednesday as an organization that will set the standards for the open-banking rule.

The selection of FDX for a five-year run as an industry standard-setting body followed an open-comment period; CFPB said it will continue considering other applicants. FDX claims over 200 member organizations, ranging from data providers, recipients and aggregators to open-banking participants and industry groups. 

In its approval of FDX’s application, the CFBP spelled out several conditions to which the company must agree: standards must be developed without consideration of “pay to play,” such as “sponsorships or other financial incentives to give certain market players secret information or any other advantage”; FDX must report to the CFPB or make public a resource that lists company disclosures of standards usage and certifications of compliance; and FDX must make publicly available any information about the consensus standards it implements, plus insight into its “development and issuance processes.”

“Without making any statement about the merits of any current FDX standard, the CFPB accepts that FDX maintains standards that are relevant to open banking in the United States, and, given FDX’s membership and standard-setting processes, the CFPB sees no reason to expect that to change going forward,” the agency wrote in its order.

“Without requiring FDX to adopt any specific standard in any specific area,” the order continued, “the CFPB encourages FDX to make use of the standards development procedures and associated governance structure that it has built (and continues to evolve) by looking to adopt further standards in areas of relevance to open banking in the United States.”