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Independent Community Bankers of America
May 28, 2004
Office of the Comptroller of the Currency
250 E Street, S.W.
Public Information Room
Mail Stop 1-5
Washington, D.C. 20219
Attention: Docket No. 04-09
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve
System
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551
Attention: Docket No. R-1188
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
Re: RIN 3064-AC81
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, N.W.
Washington, D.C. 20552
Attention: Docket No. 2004-16
Re: Fair Credit Reporting Medical Information Regulations
Dear Sir or Madam:
The Independent Community Bankers of America (ICBA)1
appreciates the opportunity to comment on proposed regulations
implementing Section 411 of the Fair and Accurate Credit Transactions
Act of 2003 (FACT Act).
Background
The FACT Act prohibits a creditor from obtaining or using medical
information pertaining to a consumer in connection with any
determination of the consumer’s eligibility, or continued eligibility,
for credit. Under the FACT Act, the banking agencies are required to
create exceptions to this general prohibition and also create exceptions
to the restrictions concerning the sharing of medical-related
information with affiliates. The banking agencies now are soliciting
comment on proposed regulations that provide for these exceptions.
Under the proposed regulations, creditors may obtain and use medical
information in determining credit eligibility provided that (1) the
information relates to debts, expenses, income, benefits, collateral, or
the purpose of the loan, including the use of proceeds (2) the creditor
uses the information in a manner and to an extent no less favorable than
it would use comparable information that is not medical information in a
credit transaction, and (3) the creditor does not take the consumer’s
physical, mental or behavioral health, condition or history, type of
history or prognosis into account as part of the credit eligibility.
According to the regulators, this three-part test strikes a balance
between permitting creditors to obtain and use certain medical
information about consumers when necessary and appropriate to satisfy
prudent underwriting criteria and to ensure that credit is extended in a
safe and sound manner, while restricting the use of medical information
for inappropriate purposes.
Under the proposed regulations, banks can also obtain and use medical
information in determining credit eligibility under certain specific
circumstances such as (1) determining whether the use of a power of
attorney or legal representative is necessary and appropriate, (2) to
comply with applicable requirements of local, state or federal laws, (3)
to the extent such information is included in a consumer report from a
consumer reporting agency, and is used for the purpose for which the
consumer provided specific written consent; (4) for fraud prevention and
detection, (5) for financing medical products or services, or (6) if the
consumer requests in writing that the creditor use specific medical
information to determine the consumer’s eligibility, or continued
eligibility, for credit, to accommodate the consumer’s particular
circumstances.
The proposed rule also says that medical information can be shared
with affiliates if (1) the information is shared in connection with the
business of insurance or annuities, (2) HIPPA permits the sharing of
such information, or (3) the information is disclosed to an affiliate to
determine a consumer’s eligibility for credit as permitted under the
proposed rule.
Exceptions to the General Prohibition on Sharing of Medical
Information
As noted above, the proposed regulations contain exceptions to the
general prohibition against obtaining or using medical information in
connection with credit eligibility determinations. We applaud the
banking agencies for recognizing that these exceptions should be
created. We agree that the proposed exceptions are necessary and
appropriate to protect legitimate operational, transactional, consumer
and other needs and are consistent with the congressional intent to
restrict the use of medical information for inappropriate purposes.
As part of the general prohibition, the banking agencies have defined
“eligibility, or continued eligibility, for credit” as such term is used
under the proposed regulations. Under that definition, “eligibility for
credit” means “the consumer’s qualification or fitness to receive, or
continue to receive, credit, including the terms on which credit is
offered, primarily for personal, family, or household purposes.” We
commend the banking agencies for clarifying that “eligibility for
credit” must be related to credit for consumer purposes, and not for
business purposes. This makes the proposed regulations consistent with
the Fair Credit Reporting Act which generally does not apply to business
transactions.
Receiving Unsolicited Medical Information
The proposed regulations also contain a rule of construction for
receiving unsolicited medical information. Under this rule, a creditor
would not be considered to have received medical information in
violation of the general prohibition if it receives the information
without specifically requesting it and does not use that information in
determining whether to extend or continue to extend credit to the
consumer, and the terms on which credit is offered or continued. ICBA
applauds the banking agencies for exempting medical information that is
unsolicited and addressing this issue and urge that it be retained in
the final regulations.
Financial Information Exceptions for Using Medical Information
Under the proposed regulations, a bank may obtain and use medical
information pertaining to a consumer in connection with any
determination of the consumer’s eligibility for credit so long as (1)
the information relates to debts, expenses, income, benefits,
collateral, or the purpose of the loan, including the use of proceeds;
(2) the bank uses the medical information in a manner and to an extent
that is no less favorable than it would use comparable information that
is not medical information in a credit transaction; and (3) the bank
does not take the consumer’s physical, mental, or behavioral health,
condition or history, type of treatment, or prognosis into account as
part of any such determination.
ICBA commends the banking agencies for providing an exception so that
banks may use medical information in certain cases when they underwrite
loans. We would propose an even broader exception to include other types
of information that a bank routinely uses to determine a consumer’s
credit eligibility such as assets that could be medical in nature. ICBA
also applauds the banking agencies for including examples of permissible
and impermissible uses of medical information. The examples help to
clarify how the proposed regulations will be implemented.
Specific Exceptions for Using Medical Information
ICBA commends the banking agencies for providing specific exceptions
for using and obtaining medical information including whether a power of
attorney is necessary and appropriate, for purposes of fraud prevention
and detection, for the purpose of financing medical products and
services, and whenever a consumer requests that medical information be
used. However, we object to the fact that a consumer cannot make a
request to use medical information by signing a preprinted form. The
Supplementary Information states that “this exception would not be met
by a form that contains a preprinted description of various types of
medical information and the uses to which it might be put. Instead, it
contemplates an individualized process in which the consumer informs the
creditor about the specific medical information that the consumer would
like the creditor to use and for what purpose.” Banks rely on preprinted
forms for many different purposes including loan applications. It would
be burdensome for banks to have to rely on a consent drafted by the
consumer in order to take advantage of this exception.
Sharing Medical Information with Affiliates
ICBA also agrees with the exceptions for sharing medical information
with affiliates, particularly in connection with the business of
insurance or annuities. However, we think that it would be helpful if
the regulations provided examples of permissible medical information
sharing with affiliates, as they do when they explain the financial
information exceptions for obtaining and using medical information.
Conclusion
ICBA generally commends the banking agencies for the proposed medical
information regulations, subject to making the changes suggested above.
These regulations provide important exceptions for the use of medical
information by banks that are consistent with the congressional intent
to restrict the use for medical information for inappropriate purposes.
If you have questions or need any additional information, please do not
hesitate to contact me at 202-659-8111 or at Chris.Cole@icba.org.
Sincerely,
Christopher Cole
Regulatory Counsel
Independent Community Bankers of America
Thomas Circle, NW Suite 400
Washington, DC 20005
1 The Independent Community Bankers of America represents
the largest constituency of community banks of all sizes and charter
types in the nation, and is dedicated exclusively to protecting the
interests of the community banking industry. ICBA aggregates the power
of its members to provide a voice for community banking interests in
Washington, resources to enhance community bank education and
marketability, and profitability options to help community banks compete
in an ever-changing marketplace. For more information, visit ICBA's
website at www.icba.org.
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