Judge Temporarily Blocks CFPB Open Banking Rule

The US District Court for the Eastern District of Kentucky paused compliance deadlines for the Personal Financial Data Rights Rule after a lawsuit brought by local lender Forcht Bank, the Kentucky Bankers Association and the Bank Policy Institute.

The compliance deadlines would have required some financial institutions to be ready for the rule – designed to give Americans the right to instruct their banks to share their financial data with third party providers – by June 2026.

Now, the preliminary injunction prevents enforcement until the CFPB “has completed its reconsideration of the rule”.

That reconsideration began over the summer, the latest twist in a long-running saga.

Having published the final open banking rule in October, by May – with a new US administration in place – the CFPB moved to petition a court to have it rescinded, calling it “unlawful”.

Yet by July the bureau had had another change of heart, asking the court to stay litigation as it considered revising the rule. It is currently considering thousands of submitted public comments on the plans.

The uncertainty reflects the battle between the traditional financial industry, which vehemently opposes the rule, and the fintech sector, which is strongly in favour.

In a statement, following the judge’s decision, the Bank Policy Institute, Kentucky Bankers Association and Forcht Bank say: “This is a common-sense procedural step that doesn’t interfere with the rulemaking process but ensures banks won’t be forced to invest time and resources preparing for a rule that is currently being rewritten.”

In contrast, Ian Moloney from the American Fintech Council, says: “Halting implementation of the open banking rule delays the promise of a system where people can securely access and freely share their own financial data to get better, fairer products.”