Nearly three years after identifying the Gramm-Leach-Bliley Act (GLBA) annual privacy notice requirement as a candidate for streamlining, the CFPB issued a final rule earlier this week to allow financial institutions that meet certain requirements to deliver such notices using an alternative online delivery method. The rule will be effective immediately upon its publication in the Federal Register.
Financial institutions have typically mailed these notices. Under the CFPB’s final rule, a financial institution that meets the rule’s requirements will be able to save on mailing costs by posting its annual privacy notice on its website. While offering potential benefits to banks and nonbanks, the CFPB’s final rule does not amend separate GLBA regulations that have been issued by the SEC, CFTC or FTC. This means the CFPB’s final rule will not apply to an entity that is subject to the GLBA regulations of these other agencies. For example, auto dealers for whom the FTC has GLBA rulewriting authority would not be able to take advantage of the CFPB’s final rule.
While industry is generally pleased with the CFPB’s issuance of the final rule, the CFPB’s progress on streamlining has been limited. The GLBA annual privacy notice requirement was one of nine specific potential opportunities for streamlining regulations identified by the CFPB in the notice it published in December 2012. In the notice, the CFPB also sought input from commenters on other streamlining opportunities. Although two of the other specific opportunities identified by the CFPB have been addressed (the ATM sticker notice which was eliminated by Congress in 2012 and the credit card independent ability-to-pay requirement for applicants who are 21 or older which the CFPB eliminated last year), other streamlining opportunities identified by the CFPB and commenters continue to await the CFPB’s attention. In the December 2012 notice, the CFPB suggested that it would focus on streamlining once it had completed the mortgage-related rulemaking required by Dodd-Frank. Now that such rulemaking is nearly completed, we hope the CFPB will make streamlining a priority.
For a discussion of the rule’s requirements for using the alternative online delivery method, see our legal alert.