Yesterday the Consumer Financial Data Rights (CFDR) group, an industry consortium supporting the consumer's right to unfettered access to their financial data, submitted a response to the Consumer Financial Protection Bureau's (CFPB) request for information (RFI) regarding consumer access to financial records.
In their comment letter, the CFDR advocates for eliminating restrictions on the consumer's ability to access and permission their financial data, without hidden limitations, and for the financial services industry in the United States to embrace an open application program interface ("Open API") framework.
The CFDR is a new industry group formed by some of the most recognized companies in the financial sector, including Affirm, Betterment, Digit, Envestnet | Yodlee, Kabbage, Personal Capital, Varo Money, Capsilon, Earnup, Petal, Sipree, and SoFi.
"As a group, we fully support the creation of an Open API framework to enable financial innovation and improve the financial health of consumers," said Anil Arora, CEO of Envestnet | Yodlee. "Over 17 years ago, Envestnet | Yodlee pioneered direct and open connectivity to financial data via APIs. Now we strive to work collaboratively with financial institutions, fintech service providers, and regulators to provide consumers with access to powerful, technology-based tools that can help them improve their financial well-being."
While some institutions have moved toward an approach that allows banks to restrict access to the consumer's financial data and potentially limit the consumer's ability to share their data, the CFDR supports the consumer's right to access their financial data as codified by Section 1033 of the Dodd-Frank Act. This right enables consumers to use innovative products and services that improve their financial health.
"Without clear regulatory requirements, the CFDR believes large banks and other financial institutions will continually seek to control access available for consumers to share their financial data, and restrict how that information may be used and shared," said Jon Stein, founder and CEO of Betterment. "The CFDR supports the consumer's right to decide which pieces of their own financial data they're able to access and permission, which is critical to empowering consumers with the necessary tools to improve their financial outcomes."
The CFDR takes the position that the consumer owns her data, and should be able to control access to it. insideARM is in full agreement with this position, and would urge the CFPB and other regulators not to forget about data post-charge off.
Currently, in most cases, once an account is charged off, limited data about the account moves onto a different system, and pre-charge off data is no longer accessible to the consumer -- or to the debt collector. This causes significant confusion (exactly what do I owe, and what is it for?), frustration (what do you mean you can't tell me... and now I have to wait with this issue hanging over my head?), and often a very awkward interaction between the consumer and collector. The lack of transparency hurts all parties.