What would have been the toughest financial privacy bill in the nation was defeated by the California legislature last Saturday night.
The General Assembly, in one of its last acts before adjourning, failed to pass the Financial Information Privacy Act (S-773), which was previously approved by the Senate. The vote was 35-36 with 9 abstentions.
Democrat Sen. Jackie Speier, who sponsored the controversial measure, immediately won the state Senate’s approval, 33-1 with 6 abstentions, to remove it from further legislative consideration.
But Speier plans to introduce a new, tougher financial privacy bill next year, according to a report in the San Diego Union.
The defeated bill would have required banks, insurance companies, securities firms and financial conglomerates to obtain a customer’s written authorization to share their personal information with third parties, including affiliates, for marketing purposes.
At the same time, it would also have mandated that financial institutions to send clear, easily understood written notices to their customers about their privacy rights.
The bill also would have required the attorney general’s office to approve all privacy notices sent to consumers as required by federal law.
Speier attributed the bill’s defeat to Gov. Gray Davis, business-friendly Democrats, Republicans and the state’s banking industry.
Meanwhile, there are growing reports that consumer advocates led by the Consumer’s Union will soon launch a petition drive to have the issue place on the November 2004 ballot.
The state’s banking and financial industry is expected to launch an all-out campaign for a federal law that would prohibit states from adopting financial privacy laws or rules that go beyond the protections contained in the 1999 Financial Services Modernization Act.
That law allows banks, insurance companies, securities firms and other financial institutions to merge and offer competing products and services. However, its requires them to provide their customers with privacy notices and the right to opt out of having their personal financial information shared with third parties for marketing purposes.
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