CFPB Seeks To Vacate The Open Banking Rule

The CFPB has requested that a federal district court vacate the Biden-era Open Banking Rule (Rule) in a motion for summary judgment filed on May 30, 2025. The CFPB had previously submitted a status report to the U.S. District Court for the Eastern District of Kentucky on May 23, 2025, informing the court that after reviewing the Open Banking Rule, "Bureau leadership ... determined that the Rule is unlawful and should be set aside."

The Open Banking Rule enables consumers to access, or authorize a third party to access, and share data associated with bank accounts, credit cards, mobile wallets, payment apps and other financial products free of charge. Lenders expressing opposition to the Rule were particularly concerned with the fact that the Rule precluded banks from charging fees for access to the data. Almost immediately after former CFPB Director Rohit Chopra announced the Open Banking Rule, the Bank Policy Institute, Kentucky Bankers Association and local Kentucky lender Forcht Bank, National Association (the Banking Plaintiffs), filed a lawsuit in the Eastern District of Kentucky seeking to vacate the Rule.

The CFPB and Banking Plaintiffs had previously filed a joint motion to extend the stay proceedings on March 25, 2025, which was granted by Judge Danny C. Reeves of the Eastern District of Kentucky on March 27, 2025. Judge Reeves issued an order and stayed the proceedings for an additional 60 days, during which CFPB leadership reviewed the Rule and considered the agency's position. The CFPB's motion for summary judgment opines that "the Rule is unlawful under the APA because it exceeds the Bureau's statutory authority and is arbitrary and capricious." Specifically, the Rule violates the Consumer Financial Protection Act of 2010 (CFPA), as the CFPA does not authorize the CFPB to "broadly regulate open banking by mandating that data providers share information with 'authorized third parties,'" nor does it "authorize the [CFPB] to prohibit banks from charging any fees for maintaining and providing access through the required developer interfaces." Accordingly, the CFPB requested that the court "issue an order holding the Rule unlawful and vacating the Rule under the Administrative Procedure Act."

Following the CFPB's status report, and in line with the subsequent motion for summary judgment, the Banking Plaintiffs also filed a motion for summary judgment on May 30, 2025. The Banking Plaintiffs challenged the Open Banking Rule, not only on the basis that the CFPB "drastically overstepped its statutory authority," but also because of the threat of disrupting "a well-functioning ecosystem that was thriving under private industry initiatives." As a data-sharing environment existed in the U.S. independent of the Rule, the Banking Plaintiffs questioned the need for the Rule. The Banking Plaintiffs emphasized that rather than provide benefits to consumers, the Rule places "customers' most sensitive financial data at risk, while simultaneously handcuffing banks in their ability to mitigate that risk and assuming no role for the Bureau itself in policing it." The "burdensome, irrational and risky regulatory framework" was accordingly categorized as "unlawful many times over."

The CFPB's efforts to vacate the Open Banking Rule follow its decision to rescind all guidance materials that exceed its statutory authority, in addition to its decision to rescind several final rules that the agency has deemed unnecessary and excessive, as Holland & Knight previously reported. Based on the agency's overwhelming commitment to eliminating all rules and guidance documents that tend to exceed the scope of its authority, it is likely that changes and rescissions will continue in the coming weeks.