With technological advancements and corporate consolidations it’s no wonder that privacy has heightened as an issue of concern among consumers. While a multitude of proposals have been bandied about Washington earlier this year — with several focused specifically on banking and financial activities — much of the current financial related emphasis is on six provisions included in H.R. 10.
While consumer organizations such as the U.S. Public Interest Research Group have been actively engaged in the process, claiming that consumers continually complain about banks to them, trade associations such as the American Bankers Association say they hope to give consumers “comprehensive, strong and effective” privacy protection.
The provisions include several areas of ongoing concern in recent years.
Specifically, they would:
• Require financial institutions to establish privacy policies and disclose them annually to their customers. It would also direct regulators to establish regulatory standards which ensure the security and confidentiality of customer information.
• Permit customers to prohibit or “opt out” of permitting a financial institution to disclose confidential consumer information to nonaffiliated third parties. Again, this gives the consumer the option to choose whether or not to disclose such information.
• Prohibit the transfer of credit card or other personal account numbers to third-party marketers.
• Prohibit the transfer of personal medical information to third parties or affiliates unless the customer consents or “opts in” according to the specific language.
• Prohibit pretext calling — in other words, make it illegal for information brokers to call banks to obtain customer information with the intent to defraud the bank/customer.
• Require the Treasury and other Federal regulators to study the appropriateness of sharing information with affiliates, including the positive and negative attributes of sharing data for consumers.
While the issue of privacy is very emotional for consumers, with some fearing information availability at anyone’s fingertips, bankers say it’s important to note that there can be benefits of information sharing among affiliates — like better product offerings, for example.
Executives such as Aubrey Patterson, CEO of BancorpSouth state a key issue is one of affiliates versus outsiders.
“It doesn’t make sense to pass financial modernization if you don’t have the opportunity to share information among operating units of the same company,” Patterson states. He believes the provisions are appropriate, but adds beyond that every bank has a high moral responsibility to protect the privacy of its customers.
While a common-sense approach that takes into account consumers best interests as well as practical aspects of modern financial services practice is desired by trade associations such as the ABA, it’s important to remember that adherence to privacy concerns not only is a matter of good ethics, but good business practice.
Case in point: a nationwide survey conducted last year by CDB Research and Consulting Inc. of New York. It found that the main reason a majority of consumers are unwilling to put all of their financial eggs in one basket is that they don’t want one company to know everything about them.
Contact MBJ contributing writer Karen Kahler Holliday at firstname.lastname@example.org.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info