The prototype notice is intended for use by any financial institution and features four separate components. One explains in clear terms who the notice is from and informs the consumer that his personal information is being collected and used. Another component provides basic information about sharing practices in the financial industry, the kind of information collected and the laws governing any sharing.

A disclosure table outlines the seven basic reasons why a financial institution can share information, what each bank's specific policies are in this regard and what consumers can do in terms of controlling such sharing. According to Garrison, such a table makes it easier for a consumer to compare privacy practices across different companies. An opt-out form allows consumers to opt out of sharing specific pieces of their information.

The prototype notice also features a so-called secondary frame that contains answers to frequently answered questions and provides more detailed -- and legally required -- information under Gramm-Leach Bliley.

Such multilayered notices have already been adopted by some large companies in a bid to make their privacy policies easier to understand, said Martin Abrams executive director at the Center for Information Policy Leadership at Hunton & Williams LLP, a Washington-based law firm.

Examples include notices from Procter & Gamble, IBM, Chase and Microsoft Corp. -- all of which feature condensed descriptions of their information-sharing practices with links to more detailed and legal descriptions, Abrams said.