The federal financial services agencies are expected to shortly announce a proposed-final Gramm-Leach-Bliley Act (“GLBA”) model form privacy notice. The model notice incorporates financial institutions' required disclosures pursuant to Section 503 of the GLBA. Financial institutions that use the form to provide notice to consumers will be deemed in compliance with the privacy notice provisions of the GLBA. Once adopted and published in the Federal Register, the financial services agencies' final model notice will take effect in 30 days.
The GLBA requires, in relevant part, that financial institutions provide consumers with notice of their privacy policies and practices. The privacy notice must describe a financial institution's disclosure of nonpublic personal information to affiliated and nonaffiliated third parties. In addition, the notice must also give consumers a reasonable opportunity to opt out of certain sharing with nonaffiliated third parties.
In October 2006, the Financial Services Regulatory Relief Act (“Relief Act”) was enacted. Section 728 of the Relief Act directs the federal financial services agencies to jointly develop a model form privacy notice that incorporates all of GLBA mandated disclosures to consumers. Section 728 also provides a safe harbor. Financial services institutions that elect to use the model form will be deemed in compliance with the GLBA notice requirements. In response to the Relief Act requirements, on March 29, 2007, the financial services agencies published a proposed model privacy form. The final model privacy form is substantially similar to the proposed model form with certain revisions based on comments submitted to the agencies and consumer testing.
The final model form privacy notice addresses the legal requirements of GLBA and is designed to facilitate consumer comprehension. In terms of content, it is two pages in length, but may be printed on a single sheet of paper. The first page is organized in five parts: (i) the title, (ii) an introductory section, (iii) a disclosure table describing the types of sharing by financial institutions and, if appropriate, whether a consumer can limit or opt out of sharing, (iv) a mechanism to limit sharing for opt out purposes, and (v) the financial institution’s customer service contact information. The second page contains supplemental explanatory information in frequently asked question format, as well as definitions of relevant terms. The content set forth in the model form must remain unchanged for financial institutions to rely on the safe harbor.
The financial services agencies' announcement of the final model privacy notice is anticipated in the near future although a draft of the final rule has been circulated.