Fed consumer advisors discuss financial privacy, other matters

WASHINGTON-The elimination of Title V of the Gramm-Leach-Bliley Act (GLBA), which is the financial privacy section, was one thing consumer advocates and financial institution representatives alike agreed on during the Federal Reserve Board’s Consumer Advisory Council’s most recent meeting. However, Consumers Union Legislative Counsel Frank Torres wanted to start over again, while the financials just wanted the disclosures and related work out of the way. “The notices can be improved but they’ll always be fatally flawed,” Torres said. He suggested that rather then raise a false sense of privacy protection with consumers, Title V should just be eliminated. The financial institution representatives advocated that the notices only serve to confuse the public anyway since most institutions do not share personal information outside of their affiliates. Additionally, FleetBoston Financial Managing Director and Chief Privacy Officer Agnes Bundy Scanlan said only about 1% of customers even responded to the opt-out notice for information sharing out of 24 million sent. Other financial institution representatives agreed with the response rate even though attendees of the meeting said most institutions sent out notices in a separate mailing and not with their monthly statements. Many said they believed people did not even read them. One suggestion aimed at increasing readership was to place an alert at the top that it is a financial privacy disclosure. Kenneth Bordelon, CEO of E Federal Credit Union in Baton Rouge, Louisiana, explained that credit unions have historically been highly trusted institutions and in order to maintain that level of trust they do not share personal information anyway. Other financials agreed that it is rare to share outside of affiliates or vendors. One suggestion at the meeting was to create a template disclosure to assist all the financial institutions in providing members and customers with appropriate information in accordance with GLBA. Bordelon commented that a template for disclosures would be a good idea if there were federal pre-emption in the law. “Without modifying the law for federal pre-emption, we don’t see any hope for simplification,” said Bordelon. Recently, North Dakota reverted back to its own opt-in legislation by a voter referendum. The council also discussed the Community Reinvestment Act and financial literacy. The Consumer Advisory Council advises the Federal Reserve Board on consumer issues. Governors Susan Schmidt Bies, Mark Olson, and Edward Gramlich were in attendance. [email protected]