Regulators Issue Model Privacy NoticeInstitutions to Adopt New Form by Jan. 1, 2010 The final model privacy notice form was released by eight federal regulatory agencies on Tuesday and is designed to help consumers understand how financial institutions collect and share personal information.
Under the Gramm-Leach-Bliley Act (GLB Act), institutions must notify consumers of their information-sharing practices and inform them of their right to opt out of certain sharing practices. The model form issued can be used by financial institutions to comply with these requirements.
The Financial Services Regulatory Relief Act of 2006 amended the GLB Act to require the agencies to propose a succinct and comprehensible model form that allows consumers to easily compare the privacy practices of different financial institutions, and has an easy-to-read font.
The agencies conducted extensive consumer research and testing in developing the model form that was issued, says Loretta Garrison, Senior Attorney in the Privacy and Identity Protection Division at the Federal Trade Commission, the agency that led the development of the model form.
The agencies asked and received public comments on the new model form and considered those comments in developing a model form that is easier for consumers to understand and use, Garrison says.
"This form is going to apply to broad range of institutions, and from the public comments we received we're expecting positive adoption and use of the form that will grow over time," Garrison says. While it is very early in the adoption process, Garrison notes that already some large and medium sized institutions have said they expect to begin using it immediately. A community banking association also told Garrison that it expects members to be adopting it, too.
The final rule provides that a financial institution that chooses to use the model form obtains a "safe harbor" and will satisfy the disclosure requirements for notices. The rule also removes, after a transition period, the sample clauses now included in the appendices of the agencies' privacy rules.
The final model privacy form was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission.
Institutions will officially begin using it on January 1, or around then when the rule becomes effective, says Tony Rodriguez, an attorney in the FTC's Privacy and Identity Protection Division.