Data, duties and directors

The ICO blog recently reported that of the £2.7 million worth of fines issued in relation to nuisance calls since April 2015, only 6 of the 27 fines issued have been paid, leaving a total of £2.26 million penalties unpaid. The Privacy and Electronic Communications (EC Directive) Regulations 2003 (“Privacy Regulations”) contain powers for the ICO to fine companies which make marketing calls and texts, where the recipients have not consented to be contacted.

Recent fines that have been issued include:

• a £70,000 fine to London based Nouveau Finance Limited, a company that sent 2.2 million spam text messages without consent from the recipients;
• a £30,000 to Assist Law, a will writing firm in Weston-Super-Mare for making unsolicited marketing calls to persons registered with the Telephone Preference Service (TPS) for over a year.

Many of the companies fined however have so far avoided paying the fines by filing for insolvency. As the regulator put it “leaving by the back door as the regulator comes through the front door”.

At present the ICO can issue fines of up to £500,000 where there has been a serious contravention. These can be imposed on any legal person (e.g. a business or charity, or an individual), however there is no specific right to fine the directors responsible for such companies. A change to legislation is expected in Spring 2017 which will introduce fines of up to £500,000 for directors of nuisance marketing firms, and hopefully break the cycle whereby the same directors continue to operate under a new company.

The change in law should also be noted by all directors that fall within the remit of the Data Protection Act 1998 (“DPA”), if not the Privacy Regulations, as there is a clear move being made to seek to penalise those accountable for breaches relating to personal data. Points worth noting are:

• The ICO have the power to fine directors for breaches of the Data Protection Act where breach can be shown to have occurred with a director’s consent, connivance or neglect;
• Under the GDPR fines of value up to 4% of annual worldwide turnover, or 20 million euros, whichever is greater, will be possible;
• When the GDPR is enacted data processors as well as data controllers will also be caught; and
• Breach of general director duties to act in good faith, in the best interests of the company, and to exercise reasonable care, skill and diligence could result in an action for damages, termination of a directorship, or disqualification as a director.