Last November, the Financial Services Committee in the U.S. House of Representatives held a hearing on the security of sensitive information held by lenders and other financial institutions. The hearing, titled “Data Security: Vulnerabilities and Opportunities for Improvement,” featured testimony from several industry experts, including representatives from the American Land Title Association and National Association of Federally-Insured Credit Unions. Topics of discussion included concerns about data breach notification laws and who should bear the responsibility of breaches.
The major Equifax data breach that occurred in 2017 drove much of the discussion during November’s hearing. The breach eroded the trust Americans have not only with Equifax but with financial institutions across the country. In the wake of this and other major data breaches, congress recognized that it must thoroughly examine the shortcomings and vulnerabilities of data security regulations. Failure to improve security could affect the willingness of Americans to do business with lenders and other financial organizations.
Witnesses asked to testify at the Financial Services Committee hearing were asked many questions about what congress and the financial industry itself could do to improve security. They discussed using secure platforms for data exchange, encrypted email, reconciling accounts, strict security protocols, audits, and collaboration between financial institutions and law enforcement. They also discussed the difference between small and large lenders when it comes to cost of implementation.
If action is taken by congress as a result of this hearing and other events, the lending industry is likely to see some major changes. Fortunately for many lenders, there are already lending data security tools available to help secure borrowers’ sensitive information. MERS contains information related to countless loans that could be very valuable to thieves, and making sure that information is submitted and accessed securely is crucial.