CFPB Approves Application from Financial Data Exchange to Issue Standards for Open Banking

WASHINGTON, D.C. - Today, the Consumer Financial Protection Bureau (CFPB) issued an order recognizing Financial Data Exchange, Inc. (FDX) as a standard setting body under the CFPB's Personal Financial Data Rights rule. The order of recognition is the first to be issued under the rule. The Personal Financial Data Rights rule, which was released in October 2024, requires financial institutions, credit card issuers, and other financial providers to unlock an individual's personal financial data and transfer it to another provider at the consumer's request for free. The CFPB established a formal application process outlining the qualifications to become a recognized industry standard setting body, which can issue standards that companies can use to help them comply with the CFPB's rule. The CFPB also issued updated procedures for companies seeking special regulatory treatment, such as through "no-action letters."

FDX is a standard-setting organization, operating in the United States and Canada. It has over 200 member organizations, including depository and non-depository commercial entities; data providers and data recipients; data aggregators; service providers to open banking participants; trade and industry organizations; and other non-commercial members, including consumer groups. FDX's stated primary purpose is to develop, improve and maintain a common, interoperable standard for secure consumer and business access to financial records.

In September 2024, the CFPB received the application for recognition from FDX. CFPB published the application from FDX for public comment later that month. The application was then the first to be published for public comment.

The CFPB approved the application, subject to a number of conditions, including:

• Ban on "pay-to-play" and other conflicts of interest: The approval order ensures that FDX will develop standards to promote open banking without regard to sponsorships or other financial incentives to give certain market players secret information or any other advantage. FDX would need to ensure that the organization and its staff do not have any side arrangements that skew its financial incentives toward particular players in the industry.
• Mandatory reporting on market adoption: The approval order would require FDX to report to the CFPB on market use of its consensus standards and/or maintain a publicly available resource where companies can disclose their use of standards as well as any certifications of adherence to standards, for the benefit of open banking participants, regulators, and the public.
• Transparency and availability of standards: The approval order requires FDX to make freely available to the public any consensus standards that it adopts and maintains, subject to reasonable safeguards, and to ensure that non-members have the same access as members do. FDX must also make publicly available information about its standards development and issuance processes.

In June 2024, the CFPB finalized a rule outlining the qualifications to become a recognized industry standard setting body. The rule issued in June identifies the five key qualifications that standard setting bodies must demonstrate in order to be recognized by the CFPB, including openness, transparency, balanced decision-making, consensus, and due process and appeals.

Today's order recognizes FDX as an industry standard-setting body for five years. The CFPB continues to evaluate other applications for recognition.

Read today's order.

The CFPB also issued updated procedures for how companies can request special regulatory treatment, such as a no-action letter. The procedures seek to increase transparency and reduce favoritism for individual companies.

Read the updated Policy Statement on No-Action Lettersand Policy Statement on Compliance Assistance Sandbox Approvals.

Learn about the CFPB's Personal Financial Data Rights rule and the process for applying to be a standard-setting body.

Consumers can submit complaints about financial products and services by visiting the CFPB's website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB's website.