LEXINGTON, Ky.—A coalition of banking groups has convinced a federal judge to stay the compliance deadline for the CFPB’s Section 1033 rule aimed at making it easier for consumers to switch financial-service providers.
U.S. District Judge Danny Reeves of the Eastern District of Kentucky on Wednesday paused the compliance deadlines for the CFPB’s “open-banking” rule in a case brought by Forcht Bank, the Kentucky Bankers Association, and the Bank Policy Institute.
Analysts termed the decision a significant pause in enforcement of a major data-access/open-banking rule by the CFPB — meaning institutions (banks, credit unions, fintechs) that had been preparing for compliance now face uncertainty in timing and potential scope.
As CUToday.info has reported, many CUs have been monitoring how the CFPB’s Section 1033 rule obligations might apply—data sharing, aggregator access, consumer-directed account access—and how implementation via the CFPB would play out.
The Bank Policy Institute, Kentucky Bankers Association and Forcht Bank issued a joint statement:
“We are grateful for the court’s decision today to stay the existing rule’s compliance deadline until the CFPB completes its new rulemaking. This is a common-sense procedural step that doesn’t interfere with the rulemaking process but ensures banks won’t be forced to invest time and resources preparing for a rule that is currently being rewritten.”
The court found plaintiffs likely to succeed on multiple merits arguments: that §1033 authorizes consumer access to their own data but not compelled disclosure to commercial third parties; that the CFPB failed to assess the cumulative impact of its framework on data security; that banning interface-access fees lacks clear statutory footing; and that fixed compliance timelines are arbitrary given reliance on future “consensus standards.”