Before the Consumer Financial Protection Bureau finalizes its proposed rulemaking on personal financial data this fall, it will first codify what attributes an organization must have to be recognized under the rule as an issuer of qualified industry standards, CFPB Director Rohit Chopra said Wednesday.
The CFPB last year issued a proposed rule to implement Section 1033 of the Dodd-Frank Act, which requires businesses to make a consumer’s financial information available to them or a third party at the consumer’s direction. Among the many provisions in the nearly 300-page proposed rule is a role for standard-setting organizations, which must be “fair, open and inclusive” in order to be recognized by the CFPB. Adherence to specifications issued by recognized organizations will assist with compliance in a rapidly changing environment, according to the bureau. Speaking at the Financial Data Exchange Global Summit in Washington, D.C, Chopra said the attributes under consideration for recognition of standard-setting organizations “will not be a surprise to those who read our proposal.”
“For example, we are considering whether standard-setting organizations should be balanced, such that no single entity or group of entities dominates decision making,” Chopra said. “We will look closely at the makeup of the board or group that makes determinations with respect to the setting or modification of standards. We’ll be looking at your funding structure. If the composition suggests favoritism or if funding is dominated by one market participant, that will be a problem. Additionally, if there is no meaningful way for consumer privacy interests or the interests of small firms to be considered, that might also be a problem.”
Chopra also said the “industry should be prepared to think critically about these issues now, to stand ready to engage with us, and to prepare for applying for recognition even before the main rule is finalized this fall.”
