What should happen if a financial institution's privacy policies change?

When a financial institution's privacy policies change, it is essential to revise the privacy notice. This document serves as the primary means of communicating how the institution collects, uses, shares, and protects customer information. Updating the privacy notice ensures that customers are informed about any new practices or modifications to the existing policies, which aligns with regulatory requirements and promotes transparency.

Revising the privacy notice allows customers to understand their rights and the institution's commitments regarding their personal data. This is crucial for maintaining trust and compliance with various privacy regulations, such as the Gramm-Leach-Bliley Act in the United States, which mandates that institutions provide updated notices when policies change.

The other options do not accurately address the appropriate action when privacy policies change. A customer agreement renegotiation can be unnecessary unless specific terms directly relate to the altered privacy practices. Deleting all customer data would typically be an inappropriate response and could violate data retention policies and legal obligations. Finally, making no changes contradicts the requirement to inform customers of updates to their privacy practices. Hence, revising the privacy notice is the only correct action to take in this scenario.