UK: Spring 2017 – Business Services Briefing – Data Update

Last Updated: 17 May 2017
Article by Hugh Tebay and Claire Jacques

UK ICO PUBLISHES GUIDANCE ON OBTAINING CONSENT UNDER GDPR

The EU General Data Protection Regulation (GDPR) comes into effect on 25 May 2018, and bearing in mind the preparation required to be 'GDPR ready', the date is fast approaching. One of the challenging aspects of the GDPR is the higher standard now required for obtaining an individual's consent to the processing of their personal data, which is one basis for the lawful processing of personal data. The recently published draft guidance by the UK Information Commissioner's Office (ICO) on obtaining consent is a welcome update for businesses as they revisit their approach to processing personal data to get ready for the GDPR.

The guidance summarises the key changes as follows:

  1. Businesses will need to keep consents separate from their other terms and conditions. Consent cannot be a precondition to signing up to a business's services.
  2. Pre-ticked opt-in boxes will be banned.
  3. Businesses will need to keep accurate records to demonstrate consent.
  4. Individuals will have the right to withdraw their consent to the processing of their data at any time and must be made aware from the outset how they can do that.

Businesses will need to review any consents obtained prior to May 2018 to check they meet the GDPR standard. The ICO have indicated in their guidance that if the consent complies with the new standard there is no need to obtain new consent. However, if the process by which the consent was obtained does not meet the standard, a fresh consent will be required.

The Article 29 Working Party has promised to issue guidance on this same topic later this year, so it will be interesting to see what further clarity their guidance will add. The clear message from the ICO is that individuals are going to have stronger rights under the GDPR and businesses are going to need to start assessing their current procedures to ensure compliance.

For more information on the GDPR, please see our webinar at https://www.bsdr.com/client-exclusives/.

DRAFT REGULATION ON E-PRIVACY REVEALED

In January 2017 the European Commission unveiled the draft E-Privacy Regulation (Regulation) which, if implemented, will replace the current EU E-Privacy Directive (2002/58/EC) which is currently in place under the UK's legislation through the Privacy and Electronic Communications Regulations 2003 (PEC Regulations).

The draft proposal includes a number of reforms:

  1. Extension of the scope of the e-privacy rules to catch communications such as Whatsapp, Facebook and Skype.
  2. Stricter direct marketing requirements in an aim to protect individuals from unsolicited marketing. Callers will be required to identify themselves by displaying either their phone number or a prefix so the individual can identify that it is a marketing call.
  3. Mirroring the GDPR's definition of 'consent' whilst simplifying the rules on Cookies and other forms of consent.
  4. Bringing the fines for non-compliance in line with the GDPR. The level of fine will depend on what provision of the Regulation is breached. For breaches relating to unsolicited emails it will be the higher of €10 million or 2% of the worldwide turnover. For breaches relating to confidentiality and processing of electronic communications data it will be the higher of €20 million or 4% of worldwide turnover.

The Regulation is scheduled to be implemented from May 2018 aligning with the GDPR. However, unlike the GDPR, the majority of the Regulation's proposals are still in draft form, so, whether the implementation date is realistic or not will depend on the response from the European institutions. We will be keeping track of the progress of the proposals.

In the meantime, businesses should be looking out for any updates from the ICO and keep in mind the Regulation when they are updating their marketing procedures to ensure compliance with the GDPR.

LAW CHANGE TO CLAMP DOWN ON NUISANCE CALLS

From Spring 2017, the ICO will have the power to issue fines of up to £500,000 to an individual director of an organisation for nuisance calls. Whilst businesses can currently be fined by the ICO for breach of the PEC Regulations, many businesses avoid paying the fines by entering into liquidation.

In a statement in response to the new plans, the Information Commissioner, Elizabeth Denham, said that it will stop directors responsible from "ducking away from fines by putting their company into liquidation. It will stop them leaving by the back door as the Regulator comes through the front door".

In light of these increased powers, it is likely we will see an increase in the fines being issued by the ICO. Only last month, a Hampshire company made the news headlines for being fined one of the highest fines issued by the ICO for nuisance calls- £270,000 for making 22 million nuisance calls. Other fines issued recently by the ICO included Flybe and Honda, for breaching PEC Regulations on marketing. Flybe had deliberately sent over 3 million emails to people who had specifically said they did not want to receive marketing emails, and Honda had sent 289,790 emails to clarify certain customers' choices for receiving marketing. The two companies have been fined a total of £83,000 for breaching the PEC Regulations.

It is clear the ICO is currently doing everything within its power to protect individuals from nuisance calls, but the direction the ICO's heading is clear from this statement by the head of enforcement, Steve Eckersley, "from next May, a new data protection law will give people even stronger rights around consent giving them genuine choice and control over how their data will be used".

ICO UPDATE ON BIG DATA

In March 2017, the ICO issued a report, "Big data, artificial intelligence, machine learning and data protection" (Big Data Report), which provides an update to their 2014 report on big data. Since 2014, the application of big data analytics has spread throughout the public and private sectors. Artificial intelligence has provided the 'thinking' power behind virtual personal assistants and smart cars, and machine learning algorithms are helping to detect fraud and diagnose diseases.

The Big Data Report has added a focus on both of these processing operations, as the complexity of the processes has meant it can be problematic to see what is going on behind the scenes. This has led to a call by the ICO for new regulation of big data, artificial intelligence and machine learning, to increase transparency and ensure accountability. The Big Data Report emphasises complexity should not preclude businesses from complying with data protection laws.

The ICO provides six key recommendations for businesses in their report for data protection compliance:

  1. Anonymise personal data where personal data is not required for the analysis.
  2. Be transparent about the use of personal data and provide appropriate privacy notices at appropriate stages of a big data project.
  3. Embed a privacy impact assessment procedure in projects to identify any risks.
  4. Adopt a privacy by design approach in the development and application of big data analytics.
  5. Develop ethical principles to try and reinforce data protection principles.
  6. Implement techniques to develop auditable machine learning algorithms to check for any errors.

Big data, artificial intelligence and machine learning is a fast moving world, and we can expect to see the ICO issuing further guidance on this topic in the future.

CYBER SECURITY TRENDS AND ACTIONS

A joint report was published by the National Cyber Security Centre and the National Crime Agency last month (Joint Report), identifying the growing cyber threat to UK businesses.

In summary, the threat of cyber-attacks is increasing: ransomware is the most commonly used mode of attack and it is becoming increasingly more sophisticated. However, social engineering and spear-fishing, more commonly referred to as 'Friday afternoon fraud', have become more commonplace, where hackers encourage employees to make monetary transfers to their bank accounts. A further trend identified is the growth of the attacks involving the Internet of Things; this is a result of the increase in use of internet connected devices, which often lack the same level of security as a computer.

The Joint Report has predicted we could see a future rise in attacks that tamper with, rather than steal, data. This can be very dangerous to businesses who are not even aware that changes have been made to their system. Hackers can gain control over firewall systems, which could have the effect of weakening the security systems, allowing the hacker to gain control over confidential information.

The Joint Report emphasises how the GDPR will bring about a significant change in the way data breaches are dealt with and reported. There will be a requirement for all businesses to notify the ICO of all data breaches without 'undue' delay; notification will be the first step towards a fine.

In terms of how businesses can reduce the risk involved with data security breaches, the Joint Report recommends more focus on developing cyber skills and improving awareness of cyber crime. Businesses are encouraged to develop a full-spectrum response plan to cyber threats, focusing on cyber security, providing appropriate staff training and communication within the organisation. It is also advised they discuss professional indemnity and cyber insurance policies with their broker to ensure they have adequate coverage.

Other regulatory guidance from professional bodies, such as the RICS and the SRA have published guidance on this area. RICS, for example warns that surveyors are as vulnerable to data breaches as other professionals; the code directs readers to the Government's Cyber Essentials initiative, which sets out minimum steps a business should take to keep their data and systems secure.

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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