Bank Customers' Privacy Stressed
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Consumers: U.S. official tells gathering that pressure is building
for regulation because some banks are doing a poor job.
>From Associated Press
VENTURA, Fla.--Commercial banks must do more to protect their customers'
privacy or submit to federal regulation that would force them to do so,
acting comptroller of the currency Julie L. Williams said Monday.
Addressing a meeting of the Consumer Bankers Assn., Williams said her
office has found that while some banks do a good job of protecting
confidential financial information, many do not.
To the extent that banks are not living up to customers' expectations for
privacy, "pressure will continue to build for government action that could
lead to restrictions on your ability to use precious information
resources()," Williams told 250 top-level consumer bankers gathered here
for the final day of a four-day conference.
Privacy has emerged as a major issue for banks and regulators as the wave
of financial industry mergers has been largely driven by companies'
ability to compile vast amounts of personal financial data that can be
shared between newly merged operations.
The banking operations of the new financial services giant Citigroup have
every intention of sharing their customer information with Travelers
Group() insurance operations.
Bank customers are increasingly worried about data sharing within
companies and how easy it is for people outside their bank to obtain
private information about them. In congressional hearings over the
summer, legislators and regulators learn ed the ease with which
information brokers and scam artists were able to pry loose personal data
from bank customer service personnel.
Congress passed legislation in the recent session that criminalizes
identity theft, gives victims the ability to seek restitution and
establishes in the Federal Trade Commission a central clearinghouse to
receive complaints and assist victims. That bill is awaiting President
Clinton's signature.
The Fair Credit Reporting Act requires banks to inform their customers how
their data are being used and that the customers may instruct their banks
to not share the data within the company.
But, Williams said, too many banks are not complying with the spirit or
the letter of that law.
Williams encouraged banks to adopt voluntary privacy guidelines that have
been suggested by her office and endorsed by banking groups such as the
Consumer Bankers Assn.
Further, she said, banks need to make sure their customer service
personnel know about the guidelines and monitor their operations to make
sure the guidelines are followed.
Joseph Belew, president of the association, asked Williams whether
non-bank financial service companies such as insurers and brokerages that
are not federally regulated will be required to comply with the same
privacy standards.
Implying that companies that don't have to abide by the guidelines could
get a competitive edge, Belew said, "I'm sure I don't have to explain to
you the realities of the competitive marketplace."
Williams responded by saying bankers should view the safeguarding of
private information as a marketing asset, not a liability.
"Doing well conspicuously on privacy ought to be something that you can
turn into a positive marketing tool," she said.
-o-
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Received on Sun Nov 1 21:14:51 1998