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The CFPB on Thursday issued a proposed rule that would give consumers easy and free access to their credit union and bank financial information—a proposal that is, in part, intended to increase competition among financial services providers.
“It would jumpstart competition by forbidding financial institutions from hoarding a person’s data and by requiring companies to share data at the person’s direction with other companies offering better products,” the CFPB said, in issuing the long-awaited plan. “The proposed rule would allow people to break up with banks that provide bad service and would forbid companies that receive data from misusing or wrongfully monetizing the sensitive personal financial data.”
Credit unions and community banks that have no digital presence would be exempt from the plan.
Comments from CFPB Director
“When it comes to our financial lives, a handful of very large banks and financial firms control much of the market,” CFPB Director Rohit Chopra said. “This has left many families with fewer viable options, and many people feel stuck to the provider they signed up with years and years ago.”
Chopra said it is too difficult for consumers to switch providers, adding that many financial institutions design their products so that it is a hassle to switch.
In a competitive market, companies have an incentive to provide great customer service,” he said. “But when a company knows you’re unlikely to leave, they don’t have the same incentive to serve you well.”
Rule Details
Under the proposed rule, consumers would have the power to share data about their use of checking and prepaid accounts, credit cards and digital wallets. Banks and credit unions would be required to make personal financial data available, at no charge to consumers, through dedicated digital interfaces.
The proposal also would give people the right to revoke access to their data.
What’s Next?
The rule would be implemented in phases, with larger financial services providers being subject to the rule much sooner than smaller ones.
Comments on the proposal are due Dec. 29; the CFPB said it hopes to issue a final rule in the Fall of 2024.
CFPB
