In a significant turn of events, the Consumer Financial Protection Bureau (CFPB or Bureau) has decided to initiate a new rulemaking process concerning its final rule on personal financial data rights under Section 1033 of the Consumer Financial Protection Act of 2010 (1033 rule). This decision comes amidst ongoing legal challenges, notably from Forcht Bank, N.A.; Kentucky Bankers Association; and the Bank Policy Institute, which filed a lawsuit immediately after the 1033 rule was finalized challenging it.
Background
As discussed here, the CFPB’s 1033 rule, issued in October 2024, mandated that financial institutions provide consumers with the ability to access and transfer their financial data to authorized third parties at no cost. However, the 1033 rule faced immediate legal challenges, with plaintiffs arguing that it compromised consumer privacy and data security.
Recent Court Order
On July 29, 2025, the CFPB filed a motion to stay on the basis that:
In light of recent events in the marketplace, the Bureau has now decided to initiate a new rulemaking to reconsider the Rule with a view to substantially revising it and providing a robust justification. The Bureau seeks to comprehensively reexamine this matter alongside stakeholders and the broader public to come up with a well-reasoned approach to these complex issues that aligns with the policy preferences of new leadership and addresses the defects in the initial Rule.
The Bureau indicated that it plans to issue an advance notice of proposed rulemaking within three weeks, signaling a swift approach to addressing the concerns raised by stakeholders and the court.
That same day, the U.S. District Court for the Eastern District of Kentucky granted the motion. The court ordered the parties to submit a joint status report every 45 days and within seven days of final agency action on the 1033 rule.
Implications of the Stay
The CFPB’s request to stay the proceedings in order to pursue a new rulemaking is a dramatic shift away from the Bureau’s prior efforts to vacate the rule in its entirety. The court’s decision to grant the stay provides a strategic pause, allowing the CFPB to engage with stakeholders and the public to refine its approach to open banking. The stay could potentially render the current legal proceedings moot if the revised 1033 rule addresses the plaintiffs’ concerns.
