Federal Agencies Plan Review of Financial Privacy
Eight federal agencies plan a hearing on the new financial privacy rules implemented over the past year.
Under the Financial Services Modernization Act allows banks, insurance and other financial institutions to merge and offer competing products and services, but requires them to provide their customers with privacy notices, including the right to opt-out from having their personal information shared with third parties for marketing purposes.
The eight agencies that adopted the rules are holding the hearing in December because of complaints. Aspects of those rules–primarily those related to the sharing of a customer’s personal financial information with third parties–have been sharply criticized by both lawmakers and consumer groups as being either too confusing or too vague to be understood.
Even some financial services organizations have been seeking additional guidance about the form and content of the notices they are sending to customers, the agencies said.
The agencies are the Federal Trade Commission, the Federal Reserve Board, Commodity Futures Trading Commission, Comptroller of the Currency, Office of Thrift supervision, Federal Deposit Insurance Corp., National Credit Union Administration and the Securities and Exchange Commission.
The announcement of the hearing follows the introduction of a bill that would replace the opt-out provision in the FSMA with an opt-in provision. This provision would prohibit financial institutions from sharing a customer’s personal financial information with third parties for marketing purposes without permission.
The bill, HR-2720, is sponsored by Reps. Edward Markey (D-MA) and Joe Barton (R-TX), who say the change would give consumers complete control over their personal financial information.
