California State Senator Jackie Speier’s (D) latest attempt to overhaul operations of the financial services industry will backfire and consumers will pay the price, according to the American Insurance Association (AIA).
“Here we go again,” Bill Gausewitz, AIA assistant vice president, western region, said. “With two weeks left in the California session, legislation pertaining to consumer privacy is being drastically altered. 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.”
The measure, SB 773, authored by Senator Speier will create an opt-out system for information sharing between affiliated entities and an opt-in system for information sharing between non-affiliated third parties.
“Congress spent several years crafting a national law to give consumers new rights over how their personal information is handled,” Gausewitz remarked. “Federal law already provides consumers the right to prevent their banks, credit unions, insurers and securities firms from sharing their financial information for marketing purposes.” “The lights went out the last time the California Legislature approved a wholesale restructuring of a broad industry,” Gausewitz said. “This bill will fundamentally change how companies operate internally. The opt-out system among affiliates 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 this bill becomes law, Californians will be inundated with a third privacy rights notice in addition to the notices already required by the federal Fair Credit Reporting Act and the federal Gramm-Leach-Bliley Act.
“With 13 days remaining in the 2002 legislative session, Senator Speier’s decision to hold a press conference announcing major changes to SB 773 seems a bit rash. Financial services companies are waiting to see the latest version of the bill so that we can fully assess how this measure will impact California consumers,” Gausewitz added.
Was this article valuable?
Here are more articles you may enjoy.