Magazine article American Banker

Passivity on Privacy Seen at Some Financial Firms

Magazine article American Banker

Passivity on Privacy Seen at Some Financial Firms

Article excerpt

Many banking and investment companies are still taking a wait-and-see attitude on privacy. A survey by KPMG at the Investment Company Institute's general membership meeting last week found that 34% of banking and investment companies are giving information about customers to nonaffiliated third parties for joint marketing purposes or for operational support. Of the 100 companies surveyed, 26 had not adopted a privacy policy, despite the tougher consumer privacy protections enacted last fall in the Gramm-Leach-Bliley law. "Investment firms should not have to wait for regulators to enforce policy," said Steven Roberts, principal partner in KPMG's financial services practice. "Privacy is already an important issue for a growing proportion of investors, and as attention is focused on privacy by public debate, investors will look to those providers who regard privacy of customer data as a necessary element of maintaining investor confidence." The Gramm-Leach-Bliley privacy provisions, which take effect July 1, 2001, require banks to give customers a statement of their privacy rights when they open an account and to send reminders annually. In order to release customer information to nonaffiliated third parties, banks would have to give customers an opportunity to block the release. W. Christopher Maxwell, an analyst in Rockhall, Md., said that regardless of Gramm-Leach-Bliley banks should comply with strict protocols on what customer information can be released. "Banks customarily are super-cautious as to maintaining confidentiality," he said. "It is a bank's responsibility to provide privacy. …

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