The U.S. District Court for the Eastern District of Kentucky today issued an injunction halting the implementation of the Consumer Protection Financial Bureau’s (CFPB) Personal Financial Data Rights Rule, which the agency said is designed to give consumers more control over their financial data.
The injunction cited the ongoing debates about data access and security.
“The plaintiffs raise a reasonable argument that the CFPB failed to address a key issue: How data providers are expected to comply with the Rule when the ‘consensus standards’ may not yet exist,” said Judge Danny Reeves in issuing the injunction.
Among those debating changes in what is commonly known as the open banking rule were Cynthia Lummis (R-WY), Chair of the Senate Banking Subcommittee on Digital Assets Chair, who had asked for open banking, and the Bank Policy Institute (BPI), which wanted to see the status quo, arguing that the proposed change put sensitive consumer financial data at risk and exceeded the CFPB’s legal authority.
“The court’s decision ensures banks won’t waste resources preparing for a rule being rewritten, said BPI, the Kentucky Bankers Association, and Forcht Bank said in a joint statement following the ruling. Sen. Lummis cited the following as benefits of the CFPB open banking rule:
- It enables access to financial services for rural communities via phones and computers. These tools make it easier to build credit with alternative scoring models that use transaction or banking data to prove ability to pay.
- Open banking supports small businesses and agriculture operations with better cash flow and credit access. Ranchers, farmers, and mom-and-pop shops across Wyoming often rely on seasonal or irregular income. Fintech tools can provide more flexible payment, financing, and invoicing options that align with that cash flow (e.g. verifying income in real time, dynamic credit) but only if consumers have control over their data to use these tools.
- It provides access to third-party tools that increase options so they can compare financial products like loans, credit cards, and savings, leading to the best possible transaction terms.
- Open banking helps automate payments, reduce travel and postage, avoid late fees, and enhance budgeting and fraud detection.
With the injunction, banks are temporarily relieved from upgrading their digital platforms to comply with the halted regulation
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