Understanding the “Personal Financial Data Rights” Rule: What Financial Institutions Need to Know

How this Regulatory Change Affects Financial Institutions and its Ripple Effect on Sales Organizations

Financial institutions are at the forefront of regulatory changes that can have a significant impact on their operations. The “Personal Financial Data Rights” rule, proposed by the Consumer Financial Protection Bureau (CFPB) on October 19, 2023, is one such development that financial institutions need to be well-informed about. Beyond its direct implications, this rule can also affect sales organizations, and understanding these dynamics is crucial.

1. The “Personal Financial Data Rights” Rule: A Key Regulation

The CFPB’s proposed “Personal Financial Data Rights” rule aims to implement Section 1033 of Title X of the Dodd-Frank Act, requiring covered financial institutions to provide consumers and authorized third parties with access and portability options for their financial data. This rule has the potential to reshape how financial institutions manage and share data.

And as many sales organizations have noticed, sponsor banks often rely on the ISOs, particularly, FSPs to manage their compliance. Thus, a breach by the sponsor bank could impute the ISO.

2. The CFPB’s Objective: Encouraging Competition and Open Banking

CFPB Director Rohit Chopra emphasized the rule’s goal of increasing competition and promoting open banking. Open banking, when properly regulated, can stimulate innovation, benefit consumers, and offer opportunities for smaller financial service startups.

If effective, this could help open up more sponsor bank possibilities.

3. Regulatory Timeline and Public Input

The CFPB plans to finalize the rule by the following fall, and they are currently seeking public comments until December 29, 2023. Financial institutions need to actively engage in this process to help shape the rule’s final form.

ISOs should review the bill and consider commenting.

4. Section 1033: A Long-Awaited Regulation

Section 1033 of the Dodd-Frank Act is a long-anticipated regulation that focuses on consumer access to their financial data. It has been in the spotlight for over a decade due to its potential to enhance competition and innovation in the financial industry by enabling consumers to access and share their financial information with ease. However, striking the right balance between data access and privacy remains a key challenge. Its careful implementation and ongoing adaptation to the evolving financial landscape are essential for its success and for the protection of consumer interests.

5. The Intricate Provisions of the Proposed Rule

The “Personal Financial Data Rights” rule introduces complex provisions:

A. Data Providers and Authorized Third Parties

Understanding the definitions of “data providers” and “authorized third parties” is essential for financial institutions to ensure compliance. The current framework leaves this open to interpretation.  We have argued that ISOs are amongst the exempt parties, but it’s a thin margin.

B. Data Access and No Fees

Data providers are required to grant access to financial data without charging fees, ensuring fair access for all parties.  This creates additional expense that will likely be pushed to the ISOs.

C. Developer Interfaces and Data Security

Compliance mandates that data providers create developer interfaces and maintain data security according to established information security regulations.  Again, this likely means more fees.

D. Written Policies and Procedures

Financial institutions must establish and maintain written policies and procedures that demonstrate compliance with the rules.  Many financial institutions might not enjoy this requirement and may look to their ISOs to create this material.

E. Limitations on Data Collection for Authorized Third Parties

Authorized third parties are subject to limitations on data collection, ensuring the relevance of the data used.  This will require purging material, which is likely useful or necessary. Certainly, a problematic piece of rule-making.

F. Phased Implementation

The rule introduces a phased implementation plan, affecting larger data providers earlier. Some community banks and credit unions without digital interfaces may be exempt.

G. Sales Organizations and Their Stake in Compliance

While financial institutions directly bear the regulatory burden, sales organizations also play a pivotal role in this landscape. Sales organizations often rely on consumer data for marketing and sales strategies. With the “Personal Financial Data Rights” rule, access to such data could become more regulated and standardized. Sales organizations need to adapt to these changes, possibly impacting their targeting and customer outreach.

H. Compliance and Partner Relationships

Financial institutions may need to adjust their data-sharing practices to comply with the rule. This, in turn, can affect the partnerships and collaborations between financial institutions and sales organizations. Sales organizations must stay in sync with these adjustments to maintain their business relationships.

I. Opportunities in Open Banking

The shift towards open banking and increased competition can also create opportunities for sales organizations. They can explore new partnerships with innovative fintech startups and financial institutions that embrace open banking, expanding their market reach.


In conclusion, the “Personal Financial Data Rights” rule has profound implications for financial institutions, but its ripple effect extends to sales organizations. Understanding the rule’s provisions and how it affects data access and sharing is vital for both entities. Financial institutions must navigate the regulatory landscape, while sales organizations should adapt their strategies to align with the changing environment. By staying informed and proactively responding to these changes, both financial institutions and sales organizations can thrive in the evolving financial industry.

Just as Global Legal Law Firm has a profound understanding of the intricate realm of electronic payment processing and its associated regulations, we have delved deep into the complexities of the financial world and the potential risks involved, especially in the context of payment processing. Our mission mirrors our approach to electronic payment processing litigation: to provide invaluable insights and expert guidance. In a financial industry navigating the uncharted waters of Payment Processors, our seasoned experts stand ready to support you. Rather than venturing into this evolving landscape alone, trust in our expertise to be your guiding light. Our commitment is to ensure that you remain up to date in this dynamic environment, securing your interests at every turn.

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