The CFPB has issued a proposal to implement Section 1033 of the Consumer Financial Protection Act (CFPA). The purpose of Section 1033 is to promote fair and open banking. In other words, to make it easier for consumers to switch financial institutions which, in turn, will improve both customer service and more favorable terms for consumers.
Digitization and decentralization in consumer finance create new possibilities for more
seamless consumer switching and greater competitive intensity. For example, when consumers are able to share their personal financial data, they can share details about their income and expenses that may give lenders more confidence when extending credit. When a consumer can switch with less friction, this will create incentives for superior customer service and more favorable terms. At the same time, sharing personal financial data can also lead to misuse and abuse, given its commercial value.
The proposed rule would require institutions to make certain transaction and account data available to consumers and authorized third parties. It also sets standards for both accessing and protecting that data.
Comments on the proposal are due on or before December 29, 2023.