WASHINGTON A federal agency official said Monday that banking regulators, in response to industry complaints, have decided to delay a rule governing disclosures about data sharing among affiliates and to make at least one other concession.
The rule, which was expected to be completed in the next few weeks, is supposed to clarify provisions of the Fair Credit Reporting Act of 1996. This law requires banks to give customers an opportunity to opt out of data sharing among affiliates. However, the Gramm-Leach-Bliley Act of 1999 authorized regulators to define in more detail the contents and timing of these notices.
Under a proposed rule issued in September, notice would have to be given once a year and include what information is being released to affiliates, what kind of companies will have access to it, and the customers right to refuse to share the information.
Critics in the industry said that the proposal could conflict with a separate rule mandated by Gramm-Leach-Bliley requiring financial companies, by July 1, to give customers copies of their privacy policies and a chance to opt out of information sharing with third parties. These critics said the two rules could set differing notification standards, creating confusion as well as adding to the compliance burden.
Furthermore, industry groups urged the banking and thrift agencies in a Feb. 21 letter to delay adopting the proposal so that it can be revamped and so that it would not affect privacy notices that have already gone out for this year.
Steve Cross, director of the division of consumer and compliance affairs at the Federal Deposit Insurance Corp., said the rule would be delayed as the agencies try to resolve technical issues raised by the industry in several comment letters.
Agency staff thought the letters made a number of good points, Mr. Cross said.
Also, Mr. Cross said, he expects the agencies not to make the rule retroactive. Among the FDIC staff, there is agreement that we should not make any FCRA rules retroactive, he said. I understand that staff from the other agencies agree. Agency staff think it is more important that institutions get their Gramm-Leach-Bliley notices out to customers and have those notices reflect practices as of this time.