Bank Policy Institute Files Motion to Vacate CFPB Rule
The Bank Policy Institute (BPI), Forcht Bank and the Kentucky Bankers Association filed a motion in U.S. District Court for the Eastern District of Kentucky over a Consumer Financial Protection Bureau (CFPB) rule.
The rule in question is CFPB’s Section 1033 rule, which requires banks, credit unions, and other financial service providers to make consumers’ data available upon request to consumers and authorized third parties.
BPI and the other organizations say the rule is unlawful and should be vacated.
“This case involves an agency that drastically overstepped its statutory authority, injected itself into a well-functioning ecosystem that was thriving under private industry initiatives, and installed a burdensome, irrational and risky regulatory framework in its place. That regime is unlawful many times over,” the motion states.
The plaintiffs said that a robust and competitive data-sharing environment that already exists in the U.S., without the Section 1033 rule. They contend that the rule could significantly disrupt the existing ecosystem and place sensitive consumer financial data at risk.
“Banks welcome the new opportunities to serve their customers that open banking has created. But there are obvious risks. Consumer financial data can be extremely damaging in the wrong hands, especially if it can be used to move money out of consumers’ accounts. As a matter of both business necessity and regulatory obligation, banks place the highest priority on protecting their customers’ financial information. … [T]he Rule’s framework places customers’ most sensitive financial data at risk, while simultaneously handcuffing banks in their ability to mitigate that risk and assuming no role for the Bureau itself in policing it,” the motion stated.
The CFPB proposed its rule on Oct. 31, 2023 and finalized the rule largely as proposed on Oct. 22, 2024, despite receiving some 11,000 comments.