CFPB Changes Annual Notice Requirement Under Reg. P

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On Friday, the Consumer Financial Protection Bureau announced its “finalized amendments” to Regulation P, an implementing regulation of the federal financial Gramm Leach Bliley Act. Regulation P governs the provision of privacy notices for covered financial institutions. In response to legislation passed by Congress in late 2015, the final rule issued Friday permits financial institutions to avoid providing annual privacy notices to customers in certain circumstances. In addition, in cases where the annual notice requirement remains, the final rule permits financial institutions additional flexibility in the mechanism chosen to deliver such notice to their customers.

The prior version of Regulation P required financial institutions to provide their customers with a privacy notice every 12 months without exception. The new, revised Regulation P permits financial institutions to avoid such notice if (a) the institution limits its disclosure of customer “nonpublic personal information” in accordance with defined exceptions (such as disclosures to service providers or as necessary to complete a transaction requested by the customer) and (b) the institution has not changed its policies or practices “with regard to disclosing nonpublic personal information” since the last notice provided to the customer. A financial institution which does not meet both conditions must continue to provide its customers with an annual privacy notice. The revised Regulation P does not alter existing requirements to provide an initial privacy notice or, in appropriate circumstances, a revised privacy notice.

The revised Regulation P additionally permits annual notices to be provided via a “clear and conspicuous” website posting, provided that the customer to whom the notice is provided uses the website to access their financial products and services and agrees to receive notices at the website.

The revised regulation recognizes that many covered financial institutions limit their information sharing in any case and do not frequently change these information sharing policies or practices. For these institutions, the revised Regulation P is designed to provide relief from an annual notice burden likely to have been of limited use to the institution’s customers.