CNN —
Many people stay with their bank for years. For years.
This may be because they are satisfied with the service they received. But in some cases, especially if you have automatic bill payments set up, it may be because it’s too much of a hassle to move your money around.
Adam Rust, Director of Financial Services, said: “All too often, customers end up stuck with a checking account that doesn’t suit their needs. Switching is cumbersome and they are charged overdraft and late fees if they miss a recurring bill. This is because there is a risk of being exposed.” Consumers Federation of America.
New regulatory rules outlined this month by the Consumer Financial Protection Bureau will reduce that hassle and make it easier for customers to switch accounts and transfer and share financial data from banks and credit card issuers. The aim is to make it safer and always free of charge. Other financial service providers are available upon request.
“Too many Americans are trapped in financial products with poor interest rates and poor service,” CFPB Director Rohit Chopra said in a statement. “(The new rules) will allow people to get better rates and services on things like bank accounts and credit cards.”
However, the rules are not scheduled to take effect until 2026 for large financial institutions and 2030 for small financial institutions, and they already face a potential roadblock in the form of a lawsuit filed by a banking association.
If you have a checking account, credit card, or mobile wallet, some of your data, such as your transaction history, online bill payment information, or other information necessary to facilitate payments or loan applications. You may want to transfer. Or set up a new bank account.
Currently, transferring data from one institution to another, or to a personal finance management app or other fintech service, likely requires some work.
“The issue that the CFPB (rules) are addressing is the paperwork required for consumers to make changes to their accounts. … (Consumers) will want to port their bill payment directory and recurring ACH orders, but… , currently it can only be done manually,” Rust said. “Saturday is 3 hours.”
Specifically, under rules issued by the CFPB, “consumers may access data such as transaction information, account balance information, information required to initiate payments, future billing information, and basic account verification; You may allow third parties to access your information. Financial providers must make this information available to you without charging a fee. ”
The rule also limits how third parties can use and retain data that consumers request shared. For example, companies that receive personal data will be required to act on behalf of the consumer, but only as requested by the individual.
“That means companies can’t offer you payment products that use your data, but by feeding that data into personalized models, you can end up paying more for flights and other services. You’re going to be charging a fee, and that’s not what you’re going to get in the market,” Chopra said in a speech at the Philadelphia Fed.
And it could make it easier for consumers to get the loan products they want without relying as much on credit scores, he added. “If consumers choose, mortgage lenders can also make income and expense data from checking accounts available during the underwriting process. This data supplements the accuracy of traditional credit history and In the long run, this could reduce the system’s reliance on credit scores.” explained Chopra.
The banking industry was quick to voice its displeasure with the new regulations, known as the Personal Financial Data Rights Regulations. “It is clear that our long-standing concerns about scope, liability, and cost remain largely unresolved, despite years of good faith efforts by stakeholders to improve outcomes for consumers. Regardless, this is unfortunate,” Rob Nichols, president and CEO of the American Bankers Association, said in a statement.
If the lawsuit filed to block the new rules is successful, no agency may be subject to the new rules.
The lawsuit, filed by the Bank Policy Institute, the Kentucky Bankers Association, and Kentucky-based Forcht Bank, alleges the CFPB overstepped its statutory authority and that its rules endangered consumer privacy, financial data, and account security. They argue that this effectively overrides the statutory provisions. The bank claims it is already a “well-functioning ecosystem that is thriving under private leadership.”
Jarrett Seiberg, financial services policy analyst at TD Cowen Washington Research Group, said banks may have a chance to win. “The Dodd-Frank Act only requires banks to provide financial data to consumers. It also requires banks to provide data to thousands of commercial entities using unknown credentials and security protocols. Seiberg said in his daily research note last week. “The CFPB also expects banks to ensure robust security practices to third parties, but banks’ ability to enforce standards is limited.”
The CFPB has not issued a formal response to the lawsuit, but at a conference in Las Vegas on Sunday, Chopra said, “I’m not surprised that some of the biggest parties are trying to delay and stop the lawsuit.” No,” he said. In fact, they had a 50-or-so page lawsuit ready within hours of us finishing. I haven’t read their lawsuit and I don’t think they read the rules. ”
