Coming Soon: Section 1033 Obligations and Opportunities

We expect the Consumer Financial Protection Bureau (CFPB) to publish its final rule under Section 1033 of the Dodd-Frank Act later this month. Leading up to this MX recently hosted a live conversation to share insights into what we know about and expect from the final rule. 

Here’s a few key takeaways from the discussion between Jane Barratt, MX’s Chief Advocacy Officer and Head of Public Policy, and Ashwin Vasan, partner at FS Vector and former CFPB employee.

Fostering Competition

According to Ashwin, the “North Star” of Section 1033 was to foster competition — all in an effort to drive better outcomes for consumers. 

Simply put, competition is the best way to ensure consumers benefit from their financial data. This rule is designed to foster competition so that consumers receive the best use from, service for, and benefit of their financial data. 

Secondary Use Cases and Third-Party Risk

Some of the most challenging and complex parts of the upcoming 1033 rule include secondary use cases and third-party risk. Ashwin noted an underlying tension around risk in the impending rule — that between the consumer and the data provider. 

The heart of the rule is that consumers have the right to access and use their financial data, but data providers are obligated to manage risk regarding the data in their possession. 

This has raised some concerns across the industry as the proposed rule indicates consumers have the right to authorize a third party to access their data, but it is up to the financial provider to assess the risk of that access. We expect that the final rule may shed more light on this and will continue to evolve. 

Open Banking as a Channel

In the end, both Ashwin and Jane see the future of open banking in the same way. This final rule is a first step towards the channel that open banking can become. Data providers should  take this chance to make that first step a good one – to strive towards a better future that empowers better outcomes for consumers and the financial providers who serve them. 

What’s Next

The final 1033 rule from the CFPB is far from the end of the story. There are many other types of financial data that will not be covered in this initial rule making but those covered data types are coming. Data providers who get ahead on ensuring other financial account types meet expected obligations will be well-positioned to optimize their future. 

If you were not able to tune in live, catch the replay to hear more from our panel of policy experts and product leaders.