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Privacy, Privacy, Privacy
Issue Absorbs Entire Industry
Privacy debates. Privacy issues. Privacy regulations. Privacy statutes. Privacy considerations. Privacy is everywhere in the financial industry thoughts, meetings, publications, memorandums, letters, disclosures, and agendas.
The immense clouds that now loom over the industry's head like the sword of Damocles are the rules regarding the privacy of consumer financial information mandated by Title V of the Gramm-Leach-Bliley Act (GLB) also known as The Privacy Regulations. The comment period ending March 31 (unless extended) inspired many bankers to take pen in hand and make their feelings known. We sincerely hope the rule makers take into careful consideration many of the objections bankers are raising and the suggestions they are making.
"Nonpublic" vs "Publicly Available"
For instance, comments were requested on the definitions of "nonpublic personal information" and "publicly available information". There are two alternatives presented on how the agencies should treat sources available to the public, depending on whether the institution obtains the information from the consumer, even if that information is also available from sources available to the general public - or information that is available from a public source, though not obtained from that source by the institution. Bankers feel all publicly available information should be excluded from the definition of nonpublic information.
Notices To Whom? How?
Bankers are also looking for a decision on the rules governing how financial institutions must provide initial and annual privacy notices, which the statute says must go to "customers" and "consumers". Into what category would a safe deposit box renter fall, and how often, and in what fashion must they be notified? In the case of joint account depositors, or multiple account holders, must each person be notified separately? Would it be permissible to comply simply by informing customers that the policy is either in the branch or on the institution's website?
Contents of Notice
The proposal seeks to require financial institutions to describe their policies and practices regarding confidentiality, security, and integrity by explaining who has access to the information and the circumstances under which the information may be accessed. In some cases, it is necessary to legally access and collect information to determine whether or not fraudulent activity is occurring. It certainly is not advisable to disclose such practices and procedures to our consumers
Details
There are other areas covering the "opt-out" provisions and notices, the "re-use" of information and the limits of sharing account numbers with third parties all of which contain details that may be troublesome. For example, the delivery and processing of "opt-out" notices may be extremely burdensome to some financial institutions.
Date to Comply
Finally, the regulatory agencies asked the financial industry if six months following adoption of the final rules is sufficient time to enable us to comply. It is the opinion of banking operations people that the potential for third party services problems, and the systems changes, to say nothing of communicating and training all requirements for compliance, will require much longer than six months. They are asking for an 18 to 24 month transition period.
Whatever the outcome, we'll keep you current on the developments.
Editor's Note: Our thanks to John Byrne for letting us use his material for the above. With all the attention on privacy, we doubt there is a financial institution left that does not have their privacy policy firmly in place. However, just in case you don't have a head start on yours, BANKERS' HOTLINE has obtained permission to supply you with a copy of the American Bankers Association's Elements Of A Privacy Policy - Including Sample Disclosures. If you'd like a copy of the five pages emailed to you, contact us at hurst@bankersonline.com and we'll send you the file or the text - please specify. Or you can get "Elements" and copies of actual privacy policies at ABA's website at www.aba.com.
Copyright © 2000 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 10, No. 3, 3/00
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