General Data Protection Regulation 2016: could your failures to protect data leave your company insolvent?

The General Data Protection Regulation (GDPR) comes into force in just under 11 months. 

The Information Commissioner Elizabeth Denham has stated the GDPR is “a game changer”.  However, the majority of this regulation is already covered by the Data Protection Act 1998 and as such companies should already be compliant with most of the GDPR.  From keeping detailed records of all personal data and accompanying consent, to only keeping said data for a specified purpose and not retaining it for decades.

The issue therefore arises when companies review their data protection policies and see that, in fact, they have not been compliant for nearly 20 years!

Accountability

Accountability is the new buzzword for the data protection world. Companies are accountable for their actions and are accountable to the public.  The GDPR extends the rights of the public to include for example a request that any/all information is deleted from all databases under the “right to be forgotten”.

Alongside this, individuals can make a subject access request for all of their personal data held by a company and a company will have to provide the information, rectify it if required and delete any/all information if the individual requests.

The recent cyber-attacks have emphasised the need for companies to be alert to protecting the public’s personal data or they will find themselves being fined by the ICO.  Recently, Berkshire-based Boomerang Video Ltd was fined £60,000 for failing to take basic steps to stop its website being attacked.  This is likely only the beginning of the ICO’s action in relation to websites, systems and databases being hacked.

Where do the weaknesses lie?

Weaknesses in data protection lie in a lack of knowledge and understanding.

Although many employees will be aware of the term “data protection”, not as many will be aware that their day to day actions are creating weaknesses in the firm.  Such simple things as taking work home with them significantly increases the likelihood of a data breach.  

What if their home is burgled?  What if they leave the information in the car whilst they run into the shop and the car is stolen?  What if the documents or unencrypted laptop is left on the train?

This is something a business will have to educate their staff on from the board to the new starters.

Increase of fines

Currently the ICO can fine a maximum of £500,000 for breaches of the Data Protection Act.  One of the highest fines to date was Talk Talk, the UK telecoms company, who were fined £400,000 for failing to prevent a major customer data breach.  This was their second fine from the ICO and indicated that the ICO were ready and waiting to enforce against companies that do not take data protection seriously.

The GDPR will change this.  The maximum fine under the GDPR is €20,000,000 or 4% of the company’s global turnover.  This is a dramatic leap in enforcement and shows how important the protection of personal data has become due to the rise in the digital age and the ease at which information can now be transferred.

These fines could be fatal to companies.  The ICO will not worry about the company’s financial status when determining the value of a fine.  The fines will be based on the gravity of the breach itself and as such businesses may be unable to pay and face insolvency procedures.

Sheila Ramshaw, of Short Richardson & Forth, says:

For many companies, the damage to their reputation by being named on the ICO Website is equally as devastating as the financial beauty imposed on them

Are you prepared?

Many businesses do not understand their obligations and sadly believe that they do not have the time to understand them. 

This mind-set needs to be changed. Every business will be affected and as such everyone needs to be prepared to evidence that they have taken reasonable steps to protect personal data in order to stop the ICO from bringing a fine to their door.

Preparing for the GDPR is not a simple review and many businesses will need time to amend policies, appoint a Data Protection Officer (where necessary), train staff and ensure that they have a compliant culture across the firm.  Make sure that you are one of the businesses prepared for the upcoming changes.

Short Richardson & Forth have a dedicated GDPR team working with businesses to ensure compliance prior to the GDPR coming into force in May 2018.

If you would like advice on the GDPR and how to prepare, please contact Andrew Swan or Sheila Ramshaw on 0191 232 0283 or at as@srflegal.co.uk and Sheila.Ramshaw@srflegal.co.uk respectively.