Financial Services Companies Say They’ll Act To Improve Privacy Notices
Life insurance companies and other financial services providers say they are committed to improving the effectiveness of the annual privacy notices mandated by the Gramm-Leach-Bliley Financial Modernization Act.
John Dugan, legal counsel to the Financial Services Coordinating Council, last week told a Federal Trade Commission conference that the financial services industry will work with regulators and consumers to improve the usefulness of the annual notices.
The American Council of Life Insurers, Washington, is a member of FSCC.
Other members include the American Bankers Association, the American Insurance Association, the Investment Company Institute and the Securities Industry Association, all of Washington.
Dugan says much of the criticism that has been leveled at the financial services industry is due to the GLB law itself.
“The financial services industry essentially served as guinea pig for mandated notices,” he says. “Much of the criticism that has been levied against the notices is a direct result of regulatory requirements that forced the industry to include legal terms and phrases that were confusing to some consumers.”
He says FSCC will organize an industry working group to make recommendations for improving the notices.
This group, Dugan says, will hold its first meeting in January and will be comprised of privacy experts from across the financial services industry.
The group will work to simplify the terminology in the notices and minimize “legalese,” he says.
The privacy notices required by GLB have come under sharp attack from certain quarters. The notices are intended to advise consumers of their right to opt out of information sharing between their financial institutions and certain third parties.
Consumer advocate Ralph Nader recently filed a petition with the FTC calling for new rulemaking. Nader says the current notices fail to protect consumer privacy.
Most of the notices mailed out, he says, employ dense, misleading statements and confusing, cumbersome procedures to prevent consumers from opting out.
“Such notices evince a clear failure of the Acts implementing regulations to effectuate Congressional intent,” Nader says in his petition. “Without understandable notice and convenient opt-out mechanisms, the Act provides no privacy protection at all.”