![]() These and other successful examples of regulation that decentralize market power are guiding our financial data rights rulemaking. Decades before, the so-called Carterfone rules ensured that new devices could be interoperable with AT&T’s network, through standardized jacks and plugs, even if produced by third parties. This jumpstarted more competition in the market. The Federal Communications Commission’s number portability rules reduced switching costs by allowing customers to move their phone number to a new carrier. Ideally, these rules are bright lines that require a minimal number of lawyers who bill by the hour. There are many forms of procompetitive regulation, such as rules that reduce switching costs or barriers to entry, rules that promote price transparency and shopping, rules that reduce conflicts of interest, and rules that place limits on business activity in order to ensure that firms don’t exploit their control over critical networks. It’s a lot of busy work and paperwork.Īt the CFPB, we are shifting away from this approach, and instead, we are looking to create catalysts for more competition. Much of it involves financial institutions handing consumers a lot of fine print that they may not even read, like those financial privacy notices companies send. Regulation of the financial services industry has a bad name, and rightfully so.įinancial regulators have largely complied with what dominant incumbents desire by writing complicated rules to fit existing business models. Competition CatalystsĪ few words about our approach to market regulation. I’ll close by discussing the timeline and next steps to get this done. I’ll then outline some details about where we are headed, as well as what we are hoping to avoid. Then, I will describe what some of the features of a more open and competitive market would look like, along with where individual consumers and new firms will have more leverage and opportunities. ![]() Today, I want to start off by talking a bit about the CFPB’s new approach to regulation. It will provide big advantages to those who provide the best products, service quality, and rates. If successful, it will also reduce the ability for incumbents to build moats and for middlemen to serve as gatekeepers. While not explicitly an open banking or open finance rule, the rule will move us closer to it, by obligating financial institutions to share consumer data upon consumer request, empowering people to break up with banks that provide bad service, and unleashing more market competition. The provisions provide for personal financial data rights for Americans, but would only have teeth after the CFPB defined the specifics through rules. This week, the CFPB will launch the process to activate a dormant authority under Section 1033 of the Consumer Financial Protection Act that I expect will accelerate this shift. ![]() A more decentralized and neutral consumer financial market structure has the potential to reshape how companies compete in the sphere. Around the world and here at home, financial services are slowly moving toward open banking and open finance.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |