CFPB announces plan to release revised open banking regulation
The Consumer Financial Protection Bureau (CFPB) has announced a significant shift in its approach to the open banking rule, originally finalised under the Biden Administration. Instead of repealing the rule, the CFPB plans to issue a revised and substantially rewritten version of the rule [1][2][3][5].
This decision comes after a federal judge granted a stay on a lawsuit challenging the rule's legality, allowing the CFPB time to revise the rule [1][3][5]. The Bureau has also announced an accelerated rulemaking process, with an advanced notice of proposed rulemaking expected within three weeks of the July 29 stay request [3].
The original rule, issued in October 2024, mandated financial institutions to provide consumers with access to and sharing of their financial data without fees, facilitating open banking [5]. This policy shift follows initial signals that the CFPB would repeal the rule, causing concern among fintech companies reliant on open data access [4].
Consumer advocates view this move as a major reversal, with some seeing it as a ruse [6]. Bart Naylor, financial policy advocate at Public Citizen, believes the rule aimed to open banking to market competition and that reopening it is legal jujitsu in the court case. On the other hand, opponents, including many in the banking industry, argued the final rule went too far, imposing burdensome requirements and exposing sensitive financial data [7].
However, Chi Chi Wu, Director of Consumer Reporting and Data Advocacy at the National Consumer Law Center, believes the current open banking rule provides excellent protection for consumers [7]. The rule includes requirements that limit data collection to what is reasonably necessary, prohibit using data for secondary purposes, allow consumers to revoke permission to access data at any time, and offer protections against charging for the data [8].
The new CFPB leadership is set on charting a middle path, retaining the core consumer data rights mandate of Section 1033 but rewriting the rule to survive legal scrutiny and align with the current administration's priorities [9]. The protections in the current open banking rule are seen as a model for data privacy regimes and should not be watered down [8].
The updated rulemaking is ongoing as of August 2025 [1][3][5]. It's worth noting that the Trump Administration previously withdrew the rule during its regulatory rollback campaign [10]. The CFPB's decision to revise rather than repeal the rule is a significant development in the ongoing dispute over Section 1033 of the Dodd-Frank Act.
Fintech companies, initially concerned about the potential repeal of the open banking rule, may now be analyzing the implications of the Consumer Financial Protection Bureau's (CFPB) decision to issue a revised version of the rule, particularly considering the protections it provides for consumers.
Politics and general news outlets are closely monitoring the ongoing rulemaking process, as the CFPB's approach towards policy-and-legislation regarding business and finance is expected to have far-reaching effects on industry regulations and consumer rights.
