COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager's Office

DATE:

February 19, 2003

BOARD MEETING DATE:

February 25, 2003

TO:

Honorable Board of Supervisors

FROM:

John Maltbie, County Manager

SUBJECT:

SB 1 (Speier)- Financial institutions: nonpublic personal information

Recommendation

Adopt a resolution in support of SB 1 (Speier) regarding financial information privacy.

Background

Existing law provides for the regulation of banks, savings associations, credit unions, and industrial loan companies by the Department of Financial Institutions and by certain federal agencies. This bill would enact the California Financial Information Privacy Act, which would require a financial institution, as defined, to provide a specified written form to a consumer relative to the sharing of the consumer's nonpublic personal information, as defined. This bill contains other related provisions and other existing laws.

The bill would allow a consumer to direct the financial institution to not share the nonpublic personal information with affiliated companies or with nonaffiliated financial companies with which the financial institution has contracted to provide financial products and services. Consumers must actively "opt out" of information sharing among affiliates. In contrast, financial institutions must secure a consumer's permission before sharing it with nonaffiliated companies.

This bill would provide that enactment of these provisions preempts all local agency ordinances and regulations relating to this subject. This bill would enact other related provisions. This bill would also provide various civil penalties for negligent, or knowing and willful violations of these provisions. The penalties under the bill would not become operative until July 1, 2004.

Discussion

Similar to SB 773 (2002, Speier), which the County supported, this bill has several differences from San Mateo County's financial information privacy ordinance. Of note, this bill would require the consumer to "opt in" for information sharing between nonaffiliated third parties, but require the consumer to "opt out" of information sharing among affiliates. The bill also describes the form (or its substantial equivalent) to be used in seeking and receiving permission to share information. This bill includes language to preempt all local agency ordinances and regulations relating to the use of sharing nonpublic personal information by financial institutions.

SB 1 passed the Senate Judiciary Committee (5:2) with Senator Sher in support. SB 1 has been referred to the Senate Appropriations Committee.

The Board's Legislative Committee recommends support for SB 1.

Vision Alignment

Support of SB 1 (Speier) furthers the County's commitments to ensure basic health and safety for all and supports Goal #7 to maintain and enhance the public safety of all residents and visitors.

Fiscal Impact

Should this bill pass and preempt San Mateo County's financial information privacy ordinance, it would eliminate the potential cost for enforcement of the ordinance.