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SIFMA today announced the findings of a new survey of investor attitudes towards FINRA's Comprehensive Automated Risk Data System (CARDS) proposal. The survey, commissioned by SIFMA and conducted online in November by Harris Poll among 1,103 U.S. investors, found that over two-thirds (69%) of investors oppose CARDS initially after reading a brief and balanced description of CARDS; the level of opposition goes up to four in five (80%) after investors read the different concerns that have been expressed regarding the CARDS proposal. Overall, investors do not see the value CARDS provides when weighing the benefits against the risks.
"The data from this survey reveals that investors have serious concerns about the CARDS proposal and the risks such a system could pose to their privacy and the security of their most personal financial information. Over two-thirds of investors oppose CARDS after reading a balanced description of the proposal. That number in opposition jumps to four in five after investors read more about the concerns with CARDS. Similarly, seven in ten investors believe the risks posed by CARDS outweigh the benefits when initially asked for their view, and that number increases to nearly eight in ten after reading more about the challenges posed by CARDS," said Kenneth E. Bentsen, Jr., SIFMA president & CEO. "This survey shows very clearly, the tremendous level of investor opposition to the proposal that FINRA collect all their individual account data on a regular basis. Notwithstanding the good intentions of FINRA, this further serves to cast even more doubt on the appropriateness of this proposal."
Highlights of the survey include:
- Over two-thirds (69%) of investors initially oppose CARDS after reading a brief and balanced description of the proposed program. After investors read the different concerns that have been expressed regarding the CARDS proposal, that number in opposition to CARDS jumps to 80% (strongly/somewhat oppose).
- Additionally, seven in ten investors agree that the benefits of CARDS do not outweigh the risk when asked about threats (71% agree "the risks of FINRA's proposal outweigh the benefits, even if the data is kept anonymous, because it will create a new singular location that hackers and cyber terrorists can target, putting investors' account activity balances and money movements at risk.")
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- After reading more about the challenges presented by CARDS, that number increases to 78%.
- After reading more about the challenges presented by CARDS, that number increases to 78%.
- When introduced to more specific and nuanced information about the risk the CARDS system poses to privacy and security, investors agree the risks are high and they trust their financial professional to protect their interests.
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- Regarding cybersecurity risk, 82% of investors strongly or somewhat agree with the statement that "the protection offered by FINRA tracking my anonymized investment activity is not worth the risk of having all of my investment activity stored in one place."
- Regarding privacy, 80% strongly or somewhat agree with the statement that "the protection offered by FINRA tracking my anonymized investment activity is not worth the risk to my privacy."
- 86% strongly or somewhat agree with the statement that "my financial professional is best suited to run and maintain their own database to track this type of information. Securities firms have a responsibility to their clients to protect their personal and financial information."
- Only 13% of investors trust the government the most to keep their financial information secure compared to 87% of investors who trust their financial professional or firms the most to keep their personal financial information safe.
This survey was conducted by Harris Poll on behalf of SIFMA between November 18 and 24, 2014. A total of 1,103 surveys were collected among U.S. adults with the following characteristics: age 18+; More than $100k in investable assets; Primary or joint financial decision-maker for their household; Work with a financial professional who helps manage their finances; and Not employed in advertising, public relations, financial services, government, or market research. All interviews were collected online. The full survey information is available here: http://www.sifma.org/issues/item.aspx?id=8589952375
The survey follows SIFMA's December 1st comment letter that expresses significant concerns with FINRA's CARDS proposal, specifically that it would be duplicative of other regulatory reporting systems, would impose undue costs and burdens on member firms far exceeding any benefits, and does not appropriately account for the impact on investor privacy and cybersecurity risk, and therefore should not be filed with the Securities and Exchange Commission (SEC).
