A dormant consumer financial privacy bill in California is coming to life in the final days of the current session of the state legislature.
An amended California Senate Bill 773, a financial privacy bill introduced by Sen. Jackie Speier, D-San Mateo, and Rep. Joe Nation, D-San Rafael, was discussed during a hearing held by the California Assembly Banking and Finance Committee on Aug. 21. The committee approved it by a 7-4 vote.
The amended bill is still opposed by insurers and must jump through several parliamentary hoops if it is to be fully adopted by the legislature before the session’s Aug. 31 close. But a number of observers say the bill, which failed passage last year and will die if it doesn’t pass this term, stands a better chance of enactment.
This, according to interviews, is because of the amendments and newly won support for the measure from the California Credit Union League, Rancho Cucamonga. The support, says Mark Lowe, a spokesman for CCUL, is due to a new opt-out provision for third-party companies involved in joint marketing agreements.
Opt-outs require consumers to say they do not want personal nonpublic information shared while an opt-in assumes information cannot be used unless a consumer is asked and gives permission.
The opt-out is important, according to Lowe, because it creates a level playing field for small institutions that may need to go to outside marketing sources rather than work among affiliates of a single, larger entity.
The bill’s chances, says Bruce Ferguson, vice president-state relations with the American Council of Life Insurers, Washington, will depend on how moderate Democrats view an amendment to the bill that now requires an opt-out for joint marketing agreements rather than an opt-in. The new support of business groups could also play a factor, he explains.
Ferguson says ACLI is concerned because the bill “goes way beyond the parameters” of Gramm-Leach-Bliley.
Ferguson says other problems include a California-specific privacy notice that would have to be sent to consumers and which differs from requirements in GLB, and a model regulation of the National Association of Insurance Commissioners.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 26, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.