Natick-based Middlesex Savings Bank is among the local financial institutions preparing for the regulations imposed by the Fair and Accurate Credit Transactions Act of 2003, which is also known as the FACT Act.

As they wait for the final regulations to be issued regarding the Fair and Accurate Credit Transactions Act of 2003, also known as the FACT Act, many Massachusetts banks are beginning to prepare for the slight changes the legislation will require of financial institutions. And most banks agree the amount of time and money spent to ultimately better protect themselves and consumers has been minimal.

According to a White House press release, the FACT Act, which was signed into law on Dec. 4 of last year, will provide consumers, companies, consumer reporting agencies and regulators with tools that expand access to credit and other financial services for all Americans. It also will enhance the accuracy of consumers’ financial information and help fight identity theft.

In addition, the FACT Act permanently renews federal preemption provisions contained in the Fair Credit Reporting Act, which was first adopted by Congress in 1970 and later amended in 1996. Those provisions were set to expire this past January.

Most banks in Massachusetts have begun notifying their customers that the bank has been reporting, and will continue to report, negative activity to credit agencies. While that has been a common practice for banks for a number of years, the new law requires that consumers are made aware of it.

Dana Neshe, senior vice president of compliance at Natick-based Middlesex Savings Bank, said much of the law lists practices the bank already has in place. The legislation is simply formalizing it, she said.

“This now talks about how we have to properly dispose [information],” Neshe said.

In order to prepare, Middlesex Savings also put together a small group to oversee the legislative changes at the bank.

“We’ve [formed] a subcommittee to look at this,” explained Neshe.

As various provisions come in, smaller subcommittees are tackling each one.

“We’ve taken a look at what do we do with identity theft,” Neshe noted.

‘A Nice Measure’

According to the White House release, the major focus of the FACT Act is to better protect customers against identity theft. Consumers annually will be able to review a free credit report to check for unauthorized activity and merchants will be required to leave all but the last five digits of a credit card number off store receipts. The law also stipulates that consumers can make one phone call to set off a nationwide fraud alert.

Credit reporting agencies that receive fraud alerts will be obligated to ensure that any future requests are made by the actual consumer and not a thief posing as the consumer. Active military personnel also will be able to place an alert on their credit files when they are deployed overseas.

Regulators also will be required to create a list of “red flag” indicators of identity theft, drawn from patterns of identity thieves. Regulators then will be required to use the indicators in their compliance exams for banks and other financial institutions. Regulators will issue fines to an institution if it disregards red flag indicators that resulted in a loss to customers.

Those measures are trying to ensure lenders are making decisions based on full and fair credit histories and not on discriminatory types, according to the press release.

Officials at most local banks say they do not expect compliance with the FACT Act to be difficult. Boston-based Eastern Bank has not felt burdened by preparing for the FACT Act guidelines.

Joseph Bartolotta, spokesman for Eastern Bank, said the institution likely will spend only a few thousand dollars to comply. He said many of the regulations were already in effect at the bank because of the Fair Credit Reporting Act.

“This one is largely an update to the Fair Credit Reporting Act,” said Bartolotta. “Some of the changes occurring have already occurred here.”

Eastern Bank already has been truncating account numbers on receipts, which retailers will now be required to do.

“That’s a nice measure that we’ve had for a number of years,” Bartolotta said.

Deborah McLaughlin, chief financial officer at Somerset-based Slade’s Ferry Bank, said Slade’s Ferry has not spent a significant dollar amount on preparing for the regulation updates.

“This protects banks and customers more,” said McLaughlin. “It’s cost-effective.”

However, Neshe said Middlesex Savings has spent a “significant” amount of time readying for the FACT Act. Employees at the bank have communicated via e-mail discussing policies and procedures. Neshe said there is a cost for the bank because of extra mailings and changing forms.

Tanya Duncan, director of housing and federal policy for the Massachusetts Bankers Association, said any costs that banks incur will be primarily from providing disclosure notices; however, banks can cut costs by including them in a bank statement instead of mailing them separately, she noted.

Duncan said there has not been a lot of preparation at the banks she has contacted because the regulations have not been finalized yet. If they are not finalized by Dec. 1, when they are scheduled to go into effect, Duncan said banks will not be expected to comply until a later date.

Overall, the majority of banks have called the legislation a positive effort toward trying to protect consumers from identity theft.

“The spirit of the act is good,” Bartolotta said. “It has worthwhile changes.”

McLaughlin noted that identity theft has become a fast-growing crime and the FACT Act is a step against it.

“This is one more step. People are very serious about protecting consumer confidentiality,” she said.

The MBA was one of the trade associations that supported the passage of the FACT Act. Duncan said the association wanted a uniform act that covered the nation’s data sharing practices and strengthened consumer protection.

While some parts of the act – such as reporting negative activity – seem obvious to bankers, Neshe said it may not be so clear to consumers.

“Parts of [the act] were definitely necessary,” said Neshe. “I think the additional provisions for identity theft are good; it brings banks in line with one another.”

The only challenge with the act, Neshe said, has been its rolling schedule. Because pieces of the legislation went into effect earlier this year and others will do so later this year, Neshe said there is no real deadline and the floating timetable can be challenging for banks.