Reuters Summit-OCC's Dugan eyes simpler credit card disclosure

(For other news from the Reuters Regulation Summit, click here)

By Jonathan Stempel

WASHINGTON, Jan 10 (Reuters) - A top U.S. banking regulator on Wednesday said regulatory agencies should do more to ensure that credit card holders better understand the privacy risks that plastic entails.

John Dugan, head of the U.S. Treasury Department's Office of the Comptroller of the Currency (OCC), endorsed efforts by the Federal Reserve to review consumer credit disclosure regulations, and urged more focus group testing to gauge consumers' understanding of privacy notices.

"It's quite an interesting vanguard project for regulatory agencies," Dugan said at the Reuters Regulation Summit in Washington. "We'd like to see more of that to get at the types of disclosures that are actually more useful to consumers."

Michigan Sen. Carl Levin, a Democrat who heads the Permanent Subcommittee on Investigations, has said he plans to hold hearings aimed at stepping up federal regulation of the credit card industry.

While fees will likely be a key focus, Levin has said he also plans to focus on inadequate disclosures.

Many consumer advocates complain that such disclosures, mandated by law but often buried in small print or couched in legalese, are too difficult for ordinary people to understand.

Dugan said the Fed is doing "a soup-to-nuts review" of consumer credit disclosure regulations, including "whether they're excessive and counterproductive."

He also said the OCC has been contracting with outside experts to test consumers' understanding of privacy notices, and seeking public comment on the issue. A 1999 law popularly known as the Gramm-Leach-Bliley act required lenders to provide customers with clear, conspicuous and regular notices of their privacy policies.

But a Feb. 2006 Kleimann Communication Group Inc. study commissioned by six federal agencies, including the OCC and the Fed, found that consumers often feel "overwhelmed" by the length, complexity and vagueness of privacy notices. The study called for shorter, simpler and better designed notices.

((Reporting by Jonathan Stempel, editing by Tim Dobbyn; Reuters Messaging: jon.stempel.reuters.com@reuters.net; 646 223 6317)) Keywords: REGULATION SUMMIT/DUGAN CARDS

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