Previewing guidelines on customer privacy, Comptroller of the Currency John D. Hawke Jr. said the agency will urge banks to make it easier for consumers to block distribution of personal data.
In a letter this week to Rep. John J. LaFalce, Mr. Hawke describes the best ways for banks to comply with the so-called "opt-out" provision of the Fair Credit Reporting Act. This provision allows banks to share consumer information among affiliates, but only if customers are notified that they have a right to block the release of personal data.
"Banks have a particular stake in addressing the privacy concerns of customers," Mr. Hawke told the ranking minority member of the House Banking Committee on Monday. "Much of the public's suspicion and concerns about the privacy issue come from a lack of knowledge and understanding about how a business handles personal information."
Mr. Hawke wrote that fair-credit notices should detail the type of information banks intend to share, such as name and address, loan repayment history, and credit report information. The opt-out provision covers only credit report data.
Notices also should describe the affiliate's businesses and the purpose for sharing the data, he said.
Some data sharing may benefit consumers by eliminating the need to provide personal information every time they apply for a product, Mr. Hawke wrote. It also could provide the bank with marketing opportunities. If an affiliate knows a customer is a homeowner, it may market home equity loan products, he said.
Mr. Hawke described how banks should prepare the notices informing consumers of their right to block data sharing:
"The notice can be highlighted by: putting a box around it, putting it in bold type, putting it in type that is larger than other portions of the text, putting the notice in a different color."
Banks should make it convenient to opt out by providing self-addressed postcards, Web-based opt-out options, and a check-off box prominently displayed on the credit applications.
Marcia Z. Sullivan, director of government relations for the Consumer Bankers Association, praised Mr. Hawke for acknowledging that the industry is justified in seeking to benefit from advances in information technology.
But she criticized his suggestions as creating another regulatory burden at a time when many banks are trying to implement their own privacy policies.
"I think it is the best practices of a few banks and it would be a difficult ideal for all banks to comply with right now," she said. "I think it's very specific and I think it's premature."
She also said customers might be annoyed by some of the practices Mr. Hawke suggests.
For instance, describing affiliated companies could require excessive mailings to consumers, because these units may frequently enter or leave business lines. Consumers already complain that they get too much junk mail, she said.
The agency began working on the guidelines last fall, when acting Comptroller of the Currency Julie L. Williams warned that some banks' opt- out provisions were inadequate. Though the guidelines are voluntary, examiners will review adherence to them.
Rep. LaFalce praised the guidance. "I am pleased that OCC is taking the appropriate initiative and providing helpful guidance to the industry," he said Tuesday. However, Rep. LaFalce is preparing a bill to expand the opt- out provisions in the Act.
An alternative bill was introduced in the Senate by Paul S. Sarbanes, D- Md., and Christopher J. Dodd, D-Conn.