The banking plaintiffs in the suit challenging the CFPB’s open banking rule (“Rule”) have asked a federal court to delay the compliance date of the Rule, contending that even though the Trump Administration has said it was rescinding the rule and writing a new one, the compliance dates technically remain in effect.
The plaintiffs contend that the current compliance dates will result in their members having to spend money and time complying with a rule that will never go into effect.
The Rule is scheduled to go into effect on June 30, 2026. Forcht Bank and banking trade groups said the CFPB will not be able finalize a new rule by that date, meaning the effective date remains in place. And, they said, the administration has done nothing to delay that effective date.
Dodd-Frank requires the CFPB to issue rules that would allow consumers to obtain transaction data and other information concerning a consumer financial product or service that the consumer obtained from the covered entity.
When the Rule was issued on October 22, 2024, it was immediately met with criticism from industry groups. Forcht Bank, the Bank Policy Institute and Kentucky Bankers Association filed a lawsuit the day the Rule was released, seeking injunctive relief, alleging that the CFPB exceeded its statutory authority.
The Trump Administration agreed and said it was simply withdrawing the Rule. However, more recently, the administration said it was writing a new rule in an expedited process and intends to issue a Notice of Proposed Rulemaking soon.
“But an advance notice of proposed rulemaking is not even the actual, subsequent notice of proposed rulemaking that commences the public-comment process,” the plaintiffs argue.
They added, “It is only a preparatory step, antecedent to a potential future rulemaking, not itself a decision to reconsider the [previous] rule.”
The plaintiffs said that eight years lapsed between the CFPB’s initial request for information and the release of the current banking rule.
Without a new stay, delaying the rule’s effective date, “Plaintiffs and their members face irreparable harm in the form of substantial time and funds they will need to expend to comply with a Rule that the promulgating agency has admitted is unlawful and announced its intention to commence a new rulemaking process to replace,” they said. Those expenditures are likely to be wasted, the plaintiffs said.
The plaintiffs ask Judge Danny C. Reeves to issue a stay, delaying the rule’s enforcement until one year following the conclusion of the litigation.
Meanwhile, the battle over open banking rages on.
A coalition of consumer groups has sent a letter to leaders of the House Financial Services and Senate Banking, Housing and Urban Affairs Committees asking them to hold hearings on the open banking rule.
“On July 29th, the CFPB announced its intention to start a new rule-writing process – a decision that could indicate its renewed understanding that a financial data right rule is both overdue and essential, though other potential motivations have also surfaced,” the groups, including the Consumer Federation of America, the National Consumer Law Center and Public Citizen, wrote.
They continued, “The original rule benefited consumers and the market for consumer financial products and services by cementing consumers’ rights to share their data with the financial institutions of their choosing, enabling them to shop for a better deal and more easily ‘vote with their feet’ by using products and services offered by providers that compete with large banks or credit unions.”
They added that at the same time, the rule established some of the strongest data privacy protections that have been seen at the federal level.
The groups wrote that the rule was the product of a multi-year rulemaking process.
“The CFPB went to unusual lengths to engage consumers, academics, non-profits, and industry stakeholders from banks, credit unions, financial technology companies, and trade associations, almost all of whom expressed high-level support for the rule for years,” they wrote.
In other open banking news, the Financial Tehnology Association and 80 groups are accusing banks of finding ways to deny consumers access to basic financial services.
“Large banks are taking aggressive action to preserve their market position by imposing exorbitant new ‘account access’ fees that would prevent consumers from connecting their accounts to better financial products of their choice,” the groups wrote, in a letter to President Trump. “This access is critical to ensuring Americans have control of their own financial lives in a digital economy.”
They continued, “This is not a dispute over fair pricing; it is an anti-competitive move designed to consolidate power. It threatens to cripple innovative products and may cause small businesses and financial tools to shut down entirely.”
They asked Trump to “use the full power of your office and the broader Administration” to prevent the largest banks from “raising new barriers to financial freedom.”
Responding to the FTA letter, banking trade groups said in a statement, “Banks don’t charge consumers fees to access their data, and because of banks’ innovation and investments in secure systems, consumers have access to more financial products and secure services than ever.”
The banking trade groups accused the Financial Technology Association and other groups of having a double standard in which they may charge fees for service, while banks are expected to provide the same service for free.
“We look forward to seeing a personal financial data rights rule that comports with the statute, protects consumers, and ensures a level playing field to encourage innovation, a process the Consumer Financial Protection Bureau has already begun,” they concluded.
Attempting to address the concerns of the plaintiffs, the Bureau said on August 21 that it intends to issue a Notice of Proposed Rulemaking to extend the compliance dates.
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