NEWS: The League filed a comment letter with the CFPB last week, voicing Wisconsin credit unions’ opposition to their proposed “open banking” rule.
As we explained in a November Comment Call, the proposed rule would:
- Require financial institutions (including most credit unions) and other companies to give a consumer certain data relating to that consumer’s transactions and accounts, and to share that data with third parties (including other businesses that offer competing products) at no cost – if the consumer asks for it;
- Establish obligations for third parties accessing a consumer’s data, including important privacy protections for that data;
- Provide basic technical standards for data access; and
- Promote fair, open, and inclusive industry standards.
Our letter stressed that the CFPB’s proposal goes too far and that it would present real dangers to members’ privacy and security, as well as significant expenses for credit unions. We wrote:
We understand that Congress required the CFPB to develop an open banking rule, but what the CFPB has put forward exceeds Congress’ intent. And while CFPB may believe that this rule would foster competition for small and new financial institutions, The League fears that it will do just the opposite – harm competition by putting small financial institutions – and credit unions are small in comparison to their banking counterparts – at a distinct competitive disadvantage. We urge the CFPB to move forward carefully, gathering more data before revising this proposal to address the many flaws identified in this and hundreds of other comment letters.
A revised open banking proposal should address (among other problems) the three top concerns Wisconsin credit unions have expressed to us about this open banking rule:
- The costs and implementation burdens on credit unions;
- The risks to the security, privacy, and secondary use of member data; and
- The potential liability for credit unions when transmitting personal financial data to third parties.
We will keep credit unions informed of developments related to this proposal.