A U.S. federal judge has temporarily blocked the enforcement of a Consumer Financial Protection Bureau (CFPB) rule designed to simplify the process for consumers to switch financial service providers. Judge Danny Reeves in Lexington, Kentucky, issued the order on Wednesday, pausing compliance deadlines for the “open banking” rule. The ruling came in response to a lawsuit filed by Forcht Bank, the Kentucky Bankers Association, and the Bank Policy Institute.
Judge Reeves halted the rule pending a new rulemaking process by the CFPB. The lawsuit from the banking groups argued that the regulation exceeds the agency’s authority and imposes costly burdens. Reeves concurred, stating that the plaintiffs are likely to prove the CFPB overstepped its authority. The Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank released a statement welcoming the judge’s order, saying it ensures banks won’t be forced to invest time and resources preparing for a rule that is currently being rewritten.
The contested rule, finalised last year, aims to allow consumers to freely access and share their data from various financial accounts, including bank accounts, credit cards, and payment apps. Forcht Bank is a Kentucky-based community bank offering a range of financial services to individuals and businesses. The Bank Policy Institute is a nonpartisan research and advocacy group representing the nation’s leading banks.
