WASHINGTON - Proposed Fair Credit Reporting Act regulations that would require financial institutions to send "opt-out" forms to customers could complicate compliance with another law, a lobbying group told regulators Wednesday.
The Financial Services Roundtable sounded the warning in a letter to the four federal bank and thrift regulatory agencies, and recommended that regulators delay the effective date of the Fair Credit notices until after financial institutions distribute their first privacy notices as mandated by the Gramm-Leach-Bliley Act; the notices must be sent to customers before July 1.
The Fair Credit proposal, which is not expected to be made final until early next year, would require the notice to detail what information is being released, what kind of companies will have access to it, the customer's right to refuse to share the information, and how someone would actually execute an opt-out. An institution could choose not to issue the forms, but would then be considered a consumer reporting agency and subject to other regulations.
Gramm-Leach-Bliley requires that all customers be notified of financial institutions' privacy policies. Those that share customer data outside the corporate family must give customers an opportunity to block (or "opt out" of) the information-sharing.
Richard M. Whiting, executive director and general counsel of the Financial Services Roundtable, said in the letter: "With the publication of the proposed FCRA regulations, institutions that have prepared their initial GLBA privacy notices are faced with a dilemma: proceed with the distribution of their GLBA privacy notices and risk having to distribute revised notices after the FCRA regulations are finalized, or wait and prepare new notices once the FCRA regulations are finalized. Either choice carries significant costs for the institution."