UK: Data Protection - New EU Regulations

Last Updated: 31 May 2012
Article by Tatiana Kruse

The UK's Data Protection Act 1998 ("DPA") implemented the EC Data Protection Directive. Since that time there have been developments in technology and new ways of doing business, networking and marketing. All these have led to pressures to update data protection legislation. It is also evident that some highly publicised breaches have contributed to a build-up in a general feeling that the law needs to be strengthened.

It is no surprise, therefore, that the European Commission has issued a draft of an EU Regulation on the processing and free movement of personal data to replace the current Directive.

From a business perspective, the new proposals will have an impact on existing business models and will require changes in business processes. There would need to be an increased focus on regulatory compliance, with increased resource for this purpose. There are very many proposals in the draft Regulation which will be a matter of much debate before any new legislation is finalised and already industry stakeholders are engaging in what will be an intensive consultation and lobbying exercise.

Proposals in the draft Regulation which would impact current business models include:

  • Consent – There has been uncertainty, or perhaps latitude, under the DPA as to what amounts to consent by a data subject to personal data being processed. The Regulation proposes that such consent should be an "explicit indication" made "either by a statement or by a clear affirmative action". Linked with this would be new provisions which would render the consent ineffective if there is significant imbalance between the data subject and the controller. The data subject may withdraw previous consent at any time in respect of continued or future processing
  • Direct Marketing – Under the DPA, the data subject has the right to object to personal data being processed for direct marketing purposes. The Regulation proposes that, not only should the data subject be "explicitly" offered this right, but the offer must be clearly distinguishable from other information
  • Data Minimisation – Businesses would need to limit the personal data they hold to the "minimum necessary" for the purposes for which it is processed. This will be more restrictive than the requirement in the DPA that the personal data shall be "not excessive"
  • Right to be Forgotten and to Erasure – The data subject would have the right to require that some or all of his personal data is erased without needing to give any reason or justification. The DPA, by contrast, gives the data subject the right to require the controller to cease processing on the grounds that it is causing unwarranted damage for distress
  • Data Portability – The data subject would have the right to transmit personal data which has been supplied by him from one automated processing system into another one. What is not clear is whether this would be a copy of the data or whether the intention is that the data must be removed from the transferor's system. The transferee could, of course, be a competitor
  • Profiling – The data subject would have the right to prevent profiling which is purely automated if this profiling has an effect on his legal position or legal rights or which otherwise significantly affects him. Even if he does not object, the Regulation basically limits the use of automated profiling to the making or carrying out of a contract or if it is based on the data subject's consent. The profiling must be disclosed to the data subject. The restriction in the DPA on making decisions based solely on automated processing is much narrower
  • Territorial Scope – The Regulation would apply not only to controllers within the EU but also to businesses outside the EU which offer goods or services to or monitor the behaviour of data subjects residing in the EU.

Regulatory and compliance obligations would be increased by the following proposals:

  • Transparency – Personal data must be processed in a "transparent manner" and the controller must have transparent and easily accessible policies regarding processing and the exercise by a data subject of his rights
  • Compliance Policies – The controller must have policies and implement measures to ensure that it is in compliance with the Regulation and to be able to demonstrate this fact. In addition, the controller must have processes to verify the effectiveness of these measures. This verification is to be carried out by independent internal or external auditors, but only "if proportionate"
  • Data Protection by Design and Default – In addition to the obligation to have technical and organisational measures and procedures to ensure compliance with the Regulation and the protection of the rights of the data subject, businesses must have processes that ensure, by default, that the personal data being processed is the minimum necessary, both in terms of amount of data and time of storage, for the purpose in question.
  • Data Processing Contracts – There would be new minimum requirements for contracts between controllers and processors
  • Documentation – Each controller and processor would be required to maintain documentation of all data processing operations. The notification requirement under the DPA would cease but it is unclear whether the proposed documentation would involve the same or a greater level of detail
  • Notification of Personal Data Breach – If there has been an accidental or unlawful breach of security, including loss, alteration or unauthorised disclosure of personal data, then the breach must be reported to the supervisory authority without delay and "where feasible", not later than 24 hours after the controller becomes aware of it. The breach will also have to be notified to the data subject if it is likely to affect the protection of the data or the privacy of the data subject
  • Impact Assessment – The controller must carry out an impact assessment on the protection of personal data where the processing presents specific risks to the rights and freedoms of data subjects. This includes seeking the views of data subjects or their representatives. The impact assessment must be submitted to the supervisory authority
  • Authorisation – Controllers and processors must obtain prior authorisation from their supervisory authority in order to ensure compliance with the Regulation
  • Data Protection Officer – Business employing 250 persons or more must appoint a data protection officer (who could be a single officer for a group of companies) who must have expert knowledge of data protection law and practices. The data protection officer's appointment must be for a period of at least two years and may only be terminated if the officer fails to fulfil his or her duties
  • Penalties – There are a range of penalties for non-compliance ranging from 0.5% of worldwide turnover to 2% of worldwide turnover according to the nature of the breach.

A period of two years is being proposed for the Regulation to take effect from the time that the Regulation becomes law. Businesses need to make their views known at this stage in order to influence the final outcome.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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