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NEW Privacy Study Finds Nearly 70 Percent Of Banks And Savings Associations Will Not Share Customer Information
Credit Unions and Finance Companies are More Likely to Share
Customer Information with Nonaffiliated Third Parties
(ST. CLOUD, MINN., April 23, 2001) - When the consumer
privacy deadline rolls around in July, credit unions will be nearly twice as likely to
share customer information than banks and savings associations, according to a recent
study of the sharing practices of over 3,900 financial institutions by Bankers Systems, a
CCH INCORPORATED company.
The study, which included banks, savings associations, credit unions and finance
companies, found that the majority of banks and thrift institutions (68.8 percent)
indicated they would not be sharing customer information with nonaffiliated third parties
outside of the exceptions.
On the opposite end of the spectrum, 65.4 percent of the credit unions sampled said
they will be sharing nonpublic personal information about their members in ways that will
warrant a disclosure and opt-out rights. Credit unions that will share the information
said they do so in the best interest of their members because it will result in
opportunities for additional services of value for them.
Finance companies also showed a greater propensity to share. More than half (51.9
percent) indicated they will disclose that they share, or reserve the right to share,
their customers information with nonaffiliated third parties.
Asset Size and Location Play a Role
Asset size appears to play a role in the decision of whether or not to share customer
information. Bankers Systems analysis shows that the largest institutions are far
more likely to engage in third-party information sharing than smaller institutions. For
example, 63.5 percent of banks and savings institutions with over $1 billion in assets
plan to disclose that they share, or plan to share, customer information with
nonaffiliated third parties outside the exceptions. Conversely, only 30 percent of banks
and savings institutions with under $1 billion in assets plan to disclose that they will
share the customer information.
State by state comparisons also yielded some distinguishing data. In Colorado, Vermont,
Mississippi, Montana, North Dakota, Oklahoma and Illinois, nonsharing institutions
outnumber their sharing counterparts by a margin of more than three to one. In contrast,
two states were found to have an overwhelming majority of sharing institutions. In
Michigan, 71.7 percent of the institutions studied plan to share customer data, and in
Utah, 69 percent intend to do so.
Bankers Systems study also found that nonsharing institutions are more likely to
provide their notices well in advance of the compliance deadline. This can be attributed,
in part, to the fact that their compliance requirements allow for shorter, simpler
notices, which can be finished more quickly. Institutions with more complex notices that
include opt-out language are less likely to have their notices completed and mailed early.
In addition to the study on sharing practices, Bankers Systems has been conducting a
survey through its privacy portalPrivacyHeadquarters.comto determine just how
prepared institutions are to meet the privacy disclosure deadline in July. With over 500
financial institutions responding so far, the results are as follows:
- 9 percent of the institutions have already sent out their privacy notices,
- 28 percent have their privacy policies drafted and printed,
- 52 percent are in the process of developing their privacy policies and notices and
- 11 percent have just begun to study the requirements.
According to Bankers Systems attorney Katie Iverson, these numbers are not
"Banks, credit unions and thrift institutions are used to this type of major
regulation. For them, its a normal part of doing business," said Iverson.
"As a result, they began preparing early, and for the most part are in good shape to
meet the financial privacy deadlines in the Gramm-Leach-Bliley (GLB) Act.
"On the other hand, some organizations that will be impacted by GLB, such as
automobile dealers and insurance companies, are more retail-oriented and are not
accustomed to this type of regulation," said Iverson. "They may not understand
the magnitude of the research, analysis and decision making that is required in order to
accurately develop and disclose their privacy policies. Many of these organizations are
not far along in this process, and many of them will be scrambling before July."
Bankers Systems is the leading national provider of compliance resources solutions,
including documents, disclosures, software, training and services. The company offers a
full range of products and services to help financial institutions deal with the privacy
provisions of the Gramm-Leach-Bliley Act. Bankers Systems privacy products include
tailored disclosures in various mediums (paper, electronic, or web); training tools;
PrivacyStateWise Internet tool for managing state-specific financial privacy issues in the
banking, insurance and mortgage industries; and PrivacyHeadquarters.com, the heavily
visited portal dedicated solely to providing comprehensive privacy information for
banking, insurance, securities and mortgage professionals at no charge.
About Bankers Systems
Bankers Systems, Inc., a CCH INCORPORATED company, is a leading national provider of
compliance resource solutions for financial institutions and their legal counsel. The
companys deposit, lending and retirement plan documents, disclosures, software,
training and support services are used by more than 12,000 financial institutions,
including 83 percent of banks in the U.S. In addition, over 60 leading core processors and
systems integrators use Bankers Systems compliance-related documents and other
components in their solutions. For more information, call 800-552-9410 or visit www.bankerssystems.com. Bankers
Systems Inc. is a registered trademark of Bankers Systems, Inc.
About CCH INCORPORATED
CCH INCORPORATED, founded in 1913, has served four generations of business
professionals and their clients. The company produces approximately 700 print and
electronic products for tax, legal, securities, human resources, health care and small
business markets. CCH is a wholly owned subsidiary of Wolters Kluwer North America. The
CCH web site can be accessed at www.cch.com.
The CCH Business and Finance Group web site can be accessed at http://business.cch.com.
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