Financial Update (July-September 2000)
Consumer Privacy Protections Finalized
ew rules about how financial institutions share customer information were finalized in May. The final regulations implement the provisions of the Gramm-Leach-Bliley Act, signed into law last November, governing the privacy of consumer financial information. The regulations limit disclosure by financial institutions of nonpublic personal information about individuals who obtain financial products or services for personal, family or household purposes.
According to the final rule, once a consumer establishes a relationship with a financial institution, the institution must provide an initial notice to the customer about privacy policies. This notice must describe the conditions under which the financial institution may disclose nonpublic personal information to nonaffiliated third parties and affiliates.
The regulations also state that financial institutions must provide accurate, clear and conspicuous annual notices of their privacy policies to their current customers. In addition, financial institutions must provide a reasonable method for consumers to opt out of disclosures to nonaffiliated third parties. Consumers may exercise this option at any time, and this decision remains in force until the customer revokes it.
The regulations are the result of an interagency effort by the Federal Reserves Board of Governors, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision and apply to the financial institutions these agencies supervise.
The regulations become effective Nov. 13, 2000, but the deadline for full compliance with the regulations is extended until July 1, 2001.
The final rule is available in the Federal Register or at the Boards Web site at www.federalreserve.gov/boarddocs/press/BoardActs/2000/20000510.