The CFPB has approved FDX as the First Standard-Setting Body for Open Banking

the Consumer Financial Protection Bureau (CFPB) approved the Financial Data Exchange (FDX) as the first standard-setting body in an important step towards the implementation of open banking in the US.

Released in October 2024, the Rights to Personal Financial Data The law requires financial institutions, credit card issuers, and other financial providers to open a consumer’s personal financial data and transfer it to another provider at their request for free.

At that time, the CFPB established an application process that outlined the necessary qualifications to become a recognized industry standard-setting body. These standards help companies comply with the CFPB’s new open banking rules.

FDX, a standard-setting organization operating in the US and Canada with more than 200 member organizations, aims to develop, improve and maintain a common, interoperable standard for secure consumer and business access. in financial records. With the application process beginning in September 2024, the CFPB will now recognize FDX as an industry standard-setting body for five years.

Following approval, FDX agreed to self-monitor its policies and practices to ensure it meets the requirements set forth by the CFPB.

Under the conditions

The CFPB approved FDX’s application, subject to a number of conditions, including a ‘pay-to-play’ ban, which aims to ensure that FDX develops standards to promote open banking – without favoring some market players to give them any kind of advantage.

As part of this requirement, FDX must ensure that its staff does not have any side arrangements that could push its financial incentives to particular players in the industry.

FDX must also report to the CFPB the market’s use of its standards, as well as maintain a publicly available resource where companies can disclose their use of the standards as well as any certifications of following the standards, for the benefit of the participants in the open bank. , regulators, and the public.

Finally, the approval order requires FDX to make any consensus standards adopted and maintained freely available to the public, ensuring that non-members have the same access as members.

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