CALIF. DEFEATS PRIVACY BILL

The California Assembly Banking and Finance Committee narrowly nixed proposed legislation that would have restricted the ability of businesses to offer expanded financial services to their customers, to the relief of industry groups. SB 773 (Jackie Speier, D-Hillsborough) received five “yes” votes from the 11-member committee out of the six that were needed for passage. SB 773, which already had passed the full Senate earlier in June, would have created an “opt-in” system for information sharing with third parties and an opt-out system for affiliates. The bill would also have given customers a right to sue their financial institutions regardless of whether or not the disclosure of information caused harm. Among opponents to the legislation were the National Association of Independent Insurers (NAII) and the American Insurance Association (AIA). The NAII held that the bill would have conflicted with state privacy protections for insurance information that have been in place and proven effective for nearly two decades. All federal financial institutions were required to meet the privacy standards established in 1999’s Gramm-Leach-Bliley Act (GLBA) by July 1.