The Consumer Financial Protection Bureau (CFPB) is moving to rescind its long-anticipated open banking rule, a move that has ignited backlash from fintech advocates who accuse the agency of capitulating to Wall Street. In a court filing, the CFPB revealed it will formally petition to vacate the 1033 rule, which would have granted Americans the right to direct their banks to share personal financial data with third-party service providers.
Originally finalized in October, the rule was seen as a significant milestone for financial data portability in the U.S. market. It aimed to empower consumers, enhance competition, and support the growing digital finance ecosystem. However, it has faced sustained resistance from major financial institutions concerned about liability in the event of data breaches and the potential loss of control over customer relationships.
The Financial Technology Association (FTA) slammed the reversal. CEO Penny Lee called the move a “handout to Wall Street banks,” accusing the CFPB of undermining consumer choice and stifling competition in digital financial services.
This latest rollback is part of a broader regulatory retreat under the Trump administration’s revived influence. Under acting Director Russell Vought, the CFPB has walked back several consumer protections in recent months. In March, it abandoned an interpretive rule that would have regulated pay-in-four Buy Now, Pay Later (BNPL) lenders like credit card issuers. It has also dropped lawsuits against major banks, including JPMorgan Chase, Bank of America, and Wells Fargo, over Zelle-related fraud issues.
Adding to the rollback, a separate rule that would have brought digital payment platforms like Apple Pay, Google Pay, and X under CFPB supervision has been killed by both chambers of Congress.
Critics warn that the CFPB’s retreat from open banking threatens to entrench the dominance of legacy banks and derail innovation in personal finance at a time when Americans increasingly rely on digital tools to manage their money.