WASHINGTON The Consumer Financial Protection Bureau finalized a rule Monday that will allow institutions that limit the amount of customer data they share to post annual privacy notices online rather than by paper delivery.
The CFPB estimates the regulation could save the industry as much as $17 million annually.
"Posting privacy notices online will make it easier for consumers to access these important policies, while also making it cheaper for financial institutions to provide disclosures," CFPB Director Richard Cordray said in a statement.
The Gramm-Leach-Bliley Act requires financial institutions to send annual privacy notices to customers describing how their personal information is being shared. If the institution shares private customer information with an unaffiliated third party, the law also allows consumers to opt-out of the information sharing.
Under the new rule, financial institutions will be able to post the often lengthy privacy notices online rather than sending them in the mail so long as the customer's information was not shared in a way that triggers the opt-out provision. The rule which applies to both banks and nonbanks also allows institutions that decide to take advantage of the new regulation to inform customers about the change via a regular monthly statement rather than a separate communication.
While the CFPB rule has been supported by the industry, the National Association of Federal Credit Unions would still like to see Congress pass a bill mandating the change.
"I think it is a good first step addressing this issue. Ultimately we would like to see a legislative solution enacted" said Brad Thaler, vice president of legislative affairs for NAFCU.
Thaler added that while the CFPB rule attempts to fix some of the redundancy issues, "We think it would be cleaner and more effective if they also pass a legislative fix."
The CFPB said consumers will benefit because financial institutions will be incentivized to limit the amount of information they share in an effort to save money.
"Consumers need clear and accessible information about how their personal information is being used in the marketplace, but some of these requirements were redundant," Cordray said.