Last-Ditch Fix Could Hurt Calif. Consumers
NU Online News Service, Aug. 20, 2:25 p.m. EST?California State Senator Jackie Speier's latest attempt to overhaul operations of the financial services industry will backfire and consumers will pay the price, according to the American Insurance Association.
"Here we go again. With two weeks left in the California session, legislation pertaining to consumer privacy is being drastically altered," said Bill Gausewitz, AIA assistant vice president, Western region, referring to possible changes to SB 773, a measure authored by Sen. Speier, D-San Francisco.
The measure would create an opt-out system for information sharing between affiliated entities and an opt-in system for information sharing between non-affiliated third parties.
"After a year of inaction, are we now going to restructure the financial services industry in a matter of days? This is not the way to enact responsible public policy," Mr. Gausewitz said.
"Congress spent several years crafting a national law to give consumers new rights over how their personal information is handled," he said.
He explained that federal law already provides consumers the right to prevent their banks, credit unions, insurers and securities firms from sharing financial information for marketing purposes.
"This bill will fundamentally change how companies operate internally," he said.
The opt-out system among affiliates, he said, will require companies to establish elaborate systems to track how all customer information flows within individual businesses. "This will create huge costs, reduce consumers' opportunities for multi-line discounts, and raise the cost of basic financial products."
If the bill becomes law, he continued, Californians will be "inundated" with a third set of privacy rights' notices, in addition to the notices already required by the federal Fair Credit Reporting Act and the federal Gramm-Leach-Bliley Act, he said.
With only 13 days remaining in the 2002 legislative session, he said Senator Speier's decision to hold a press conference "announcing major changes to SB 773 seems a bit rash."
Financial services companies, he said, are waiting to see the latest version of the bill so that its full impact on California consumers can be assessed, Mr. Gausewitz said.
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