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US Senator and Democratic chair of the Senate Banking Committee this week requested that the Financial Stability Oversight Council (FSOC) examine financial institutions’ use of consumer data, and the risks they pose to US financial stability.

In the letter sent by the Senator to Treasury Secretary Janet Yellen, Brown requested that the Council assess whether “and to what extent the collection and sale of consumer data by financial institutions pose a systemic threat to US financial stability and security.”

He continued that he has long expressed serious concerns about the potential risks associated with the sale of consumer financial data, and that “the breadth of personal consumer data that financial institutions have access to and can legally sell or otherwise disclose to commercial entities and to data brokers creates a concerning entry point for bad actors to obtain and use that information for their own purposes.”

“The collection and sale of consumer financial data also opens the door to other nefarious uses, including the use of data to glean consumers’ tolerance for price hikes, or using certain people’s spending patterns to target them for blackmail or ransomware.”

Brown made headlines earlier this year, criticising “fintech companies that want to act like banks.”

He told Insider that these firms, often neo-banks, don’t offer the “consumer protections and safeguards that actual banks must adhere to,” putting people’s money at risk. “Consumers shouldn’t be getting lock out of their accounts, leaving them with no way to access their money to buy groceries, pay their bills, or make rent.”

Unlike the approach adopted in Europe, the UK, Australia, Singapore and other nations, the mandated sharing of consumer data by banks, otherwise known as open banking, does not exist in the US. Fintech players like Plaid are encouraging the development and rollout of a regulatory framework under Section 1033 of the Dodd Frank Act.

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