Financial privacy

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Financial privacy refers to the maintenance of confidentiality of customer information about transactions and finances by financial institutions. The primary principle is that customers of a financial institution are entitled to a high level of privacy for their personal and transaction information. However, complete anonymity poses other community issues, such as combating criminal activity, tax evasion, money laundering, as well as national security issues in order to stop the financing of terrorism. Such community concerns can only override the principle of personal privacy by express law to that effect.

The term financial privacy is also used to describe the issue of financial institutions selling customer information to third parties for marketing purposes, especially for telemarketing purposes. However, this issue is mixed with the issue of financial institutions sharing information within themselves, which could be considered "sharing information between companies" or "affiliate sharing", since a financial institution is not allowed to be one single company for regulatory reasons but instead must assume a holding company structure.

Use of financial information by third parties[edit]

The use by marketers of customer information has been criticized. In the United States, there has been widespread community anger against telemarketers which led to the United States National Do Not Call Registry (2003). Similar issues have been raised in other countries leading to setting up of Do not call lists, such as Canada's National Do Not Call List (2004), and Australia's Do Not Call Register (2006). Some people also object to the display of caller ID on the called party's phone, especially if this finishes being used for commercial purposes by the recipient or sold on to a third party. Some people turn off the caller ID feature on their phone.

One of the issues arising from unsolicited phone marketing is the dealing in individuals' personal information, ie. financial institutions selling personal information, balances and transaction information to third parties. However financial services companies, those that offer both banking, insurance, and investment products, say that the issue and attempted legislation on the topic was caused by smaller financial institutions who simply focused on one type of product or business. The reason for this is that combining all those products with one company creates a Walmart-style economies of scale and other synergies which are difficult to compete against as a single product line company[citation needed]. By putting forth legislation which forbids financial institutions from sharing information with other companies, single-product-line financial institutions could cripple integrated financial services companies because of the technicality that the banking, investments, and insurance parts of the business had to be operated under separate company affiliates within a holding company. Most financial services companies claim that they have never sold information to non-financial services companies. Some critics of financial institutions agreed with this analysis but continued to press for the legislation because they believed that the financial services integrated business model was fundamentally wrong; however the vast majority of critical articles focused on the issue of selling information to outside telemarketers.

See also[edit]