What’s in store for America’s consumer financial services watchdog agency – the Consumer Financial Protection Bureau (CFPB)? Nobody really knows. But many open banking and data protection and control advocates are saying: “please don’t lose sight of the
benefits of personal financial data rights,” amid the heated debate over its sponsoring agency’s future.
What is the CFPB and what do they do?
Confusion regarding impacts and next steps has become the familiar reaction to many actions and activities in US government circles these days. The CFPB was formed by Congress in 2010 as part of the Dodd-Frank (aka Consumer Financial Protection Act) post-financial
crisis/Great Recession response legislation.
The agency, which is part of the Department of the Treasury, has been one of several ‘lightning rods’ for conservative criticism while pressing forward on numerous consumer protection fronts. Under former President Biden’s watch, especially, the CFPB was
especially thorough and unabashedly aggressive in how it practiced consumer advocacy and advancement of its mission.
Although, it was sometimes in conflict with banking industry leaders, or taken to task for not focusing its resources and time on the most expensive and troubling issues confronting both providers and customers, like growing fraud in financial services,
as suggested by industry consultant
Ron Shevlin.
Why is the CFPB controversial?
Amid all the unremitting rancour, and despite the positive impacts many of its proponents, like Rep.
Brendan Boyle’s (D-Pennsylvania) claim it has “saved American consumers over $20 billion”, nobody is really surprised that the incoming Trump administration pledged to eliminate the agency.
Nor that someone associated with the administration or the ‘Department of Government Efficiency’ (DOGE) altered the CFPB’s homepage this month to make it appear it was ‘out of business’.
Nor that the unofficial government overspending and corruption identification department’s head, Elon Musk, recently posted on his X/Twitter platform
“CFPB RIP” and
sent three members of his staff to ‘embed’ themselves within the bureau and examine its systems and operations.
Has the CFPB been shut down?
The CFPB website is actually (almost) fully operational. This has been confirmed by several observers on Monday, despite the appearance of the “404: Page not found” message at its main page,
consumerfinance.gov, which began over the prior weekend.
A timeline of events
Meanwhile, the CFPB’s ‘godmother’ Senator Elizabeth Warren (D-Massachusetts), who recommended the CFPB’s creation in 2010 while a law professor and member of the Senate Banking Committee, led a
protest this Monday in front of the bureau’s headquarters.
With comments calling into question the propriety and perception of Trump ally and unofficial emissary Musk involving himself and his company X – now actively expanding into the payments field – with the CFPB’s mission, or curtailing or ‘deleting’ it as
an entity within government, she told the crowd: “We will fight for the little agency that fights for us.”
Joined by about 600 employees and supporters, Warren railed against the Musk attacks on the bureau and DOGE’s gaining access to its internal computer systems as well as the actions of its newly installed Acting Director Russell Vought.
Vought was recently
confirmed by the US Senate to lead the Office of Management and Budget, and is the ‘architect’ of the Heritage Foundation’s
policy manifesto Project 2025 which recommended, as has Musk, abolishing the CFPB.
Vought,
handed the keys to the CFPB by Treasury Secretary Scott Bessent on Friday last week, also sent an email the following Monday to all 2,000 CFPB staff instructing them not to come into its Washington DC offices, and telling them, “do not
perform any tasks.”
One day later, regulatory concerns were highlighted when Federal Reserve Chair
Jay Powell told the Senate Banking Committee – in a response to Senator Warren - that the CFPB is effectively the only agency specifically protecting consumers from deceptive practices. Warren: “If the CFPB is not there
examining these giant banks to make sure they are following the laws, not cheating consumers, who is doing that job?" Powell: “I can say no other federal regulator.”
Shifting focus to open banking
Amid rampant speculation on what’s going on and what’s coming soon - or not - for the nation’s prime consumer protection agency within the financial arena, many are trying to ignore the hype surrounding its potential or pending (and likely illegal - unless
voted on and confirmed by Congress) shutdown.
They are shifting the focus instead to a key issue that is probably the most far-reaching of many advocated for the bureau: open banking initiatives and consumer data rights, and how they will be impacted by any delays in enforcing the CFPB’s policies, by
shrinking of its mandate by Congress or the Trump administration, or by outright elimination of the bureau as threatened by those same authorities.
The CFPB, with then-Director Rohit Chopra leading the charge, issued a landmark proposal about 16 months ago “to accelerate the shift to open banking and establish stronger consumer financial data rights.”
That proposal - championed by many consumer advocates and organisations yet
challenged and complained about by many in the banking sector concerned that it was overbroad and too complicated to comply with - included clear and consistent consumer data protection, control, and exchange provisions via adding a new
Section 1033 to the original Dodd-Frank law.
As a major player in open banking, financial connection leader
Plaid, points out on their website, the new rule “requires banks and other data providers to allow consumers to access and share their financial data through safe, secure, and reliable developer interfaces (APIs – or application programming
interfaces),” and it officially became law on 17 January 2025. But that may not mean much, at least yet.
That’s because the
provisions of Section 1033 won’t actually apply (if it remains in place until then) to any industry participants nor effectively aid its intended beneficiaries (consumers) until
April 2026, and then only at first for the largest depository institutions above $250 billion in assets or non-depository providers exceeding $10 billion in total annual
receipts.
Smaller players (though only depository institutions below this level, and only those above $850 million in assets) in both financial sectors defined will be required to follow at one-year intervals – based on asset size - thereafter until 2030.
What is at stake as the stranglehold over the CFPB continues?
Will 1033’s provisions actually become operational, and if so or if not, when will financial services organisations – especially the largest ones expected to be ready in less than a year to comply with its data handling mandates – know which way (if anywhere)
to go with their preparations? Should they just ‘wait and see’ what happens with the CFPB?
We went back to two reliable industry players – both reputable and consistent sources of Section 1033 news and information - to get the current ‘scoop’ – to understand and share their views on the rule’s possible fate while the ultimate questions surrounding
its sponsoring agency continue. Both
MX and
OpenFinity have weighed in on the present situation, and continue to urge the industry to ‘stay the course’ toward 1033’s full adoption.
Laurent Van Huffel, CEO of OpenFinity – a nonprofit industry advocate and ‘gathering place’ for open banking tools and advancements used a special LinkedIn
post to list out several key issues that touch on the industry’s development of greater financial choice, and how 1033 would help ‘move the ball’ forward for consumers.
OpenFinity has been forthright since the CFPB regulation was first proposed about its potential benefits, and also about the likely operational burdens that 1033’s implementation would place on financial services companies and financial technology companies
to comply with the new ‘Personal Financial Data Rights Rule,’ as the regulation has been described by the CFPB since its introduction.
But regardless of its complexity and potential compliance costs - the organisation and many others in the industry have stated - open banking expansion is a strong, beneficial move forward for both financial institutions (banks and credit unions) as well
as fintechs and other non-bank financial institutions, and most importantly, for their customers.
In his commentary, Van Huffel asserted: “Regardless of the CFPB's fate, there is overwhelming evidence that open banking is here to stay.” Noting that over 69 countries worldwide have implemented “some form of open banking regulation,” and that more than
“96 million consumer accounts” within the US alone are actively using the CFPB’s recently selected standard for open banking data sharing, Financial Data Exchange, or FDX, the momentum of the move to open banking is clear, he said.
Further, while pointing out that a majority of financial institutions have prioritised permissioned data sharing (as the FDX standard APIs would provide), a recent event sponsored by Mastercard highlighted studies showing that “82% of U.S. consumers are
already linking their accounts" online, and "82% of Gen Z consumers in the U.S., U.K., and Australia use open banking to pay bills."
MX, for its part, has published and presented statistics showing that "79% of consumers demand greater control over their financial data.” The company continues to be a strong
advocate for the data management, protection, and consumer control principles embedded within Section 1033, along with its graduated annual rollout plans in the
US.
Van Huffel of OpenFinity concluded his commentary on the importance of not being distracted by recent or near-future CFPB confusion by noting that many other companies and organisations across the financial services and consumer protection field also are bullish
on open banking’s potential as a game-changer in the industry.
“The benefits of Open Banking extend across multiple sectors, including lending, wealth management, pay-by-bank, account switching, tax preparation, treasury, and financial inclusion—delivering tangible value to consumers, banks, and credit unions.”
Whatever happens to the CFPB as part of the political meanderings on Capitol Hill, he said, “the broader adoption of open banking and open finance is inevitable and should not slow down financial institutions in their efforts to capitalise on this opportunity.”