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Leslie Bonacum
847-267-7153
mediahelp@cch.com
Neil Allen
847-267-2179
neil.allen@wolterskluwer.com

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.

Ready … Or Not?

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 portal—PrivacyHeadquarters.com—to 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 surprising.

"Banks, credit unions and thrift institutions are used to this type of major regulation. For them, it’s 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 company’s 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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