UK: PRIVATE AND CONFIDENTIAL. - The EC Data Protection Directive is ruffling business feathers.

Last Updated: 31 Aug 2010

The EC Data Protection Directive is ruffling business feathers.

The big end of British industry loves the idea of a domestic market of 350 million consumers. It is less keen on European works councils and restricted working hours, and other actual or potential initiatives of Brussels. And now it has another one to worry about, the EC Data Protection Directive. As this was formally agreed last October, all that seemingly remains to be done is to incorporate it into UK law, which the Government is bound to do within three years of the signing date. That's not the full story, however.

In various respects, the Directive goes beyond the 1984 Data Protection Act which at present orders these things in Britain. However, it has rather different aims. 'The Directive starts with the privacy of the individual,' points out Colin Fricker, head of legal and legislative affairs at the Direct Marketing Association (DMA). The act was more concerned with regulating data users.

The Directive allows citizens greater access - than they have had up to now - to information held about them on databases, and greater power to amend it or prevent its use. Organisations will effectively be prohibited from holding certain kinds of personal data - eg, on ethnic origins, trade union membership or sexual orientation. They could also find it difficult to transfer data to some places outside the EU. Moreover manual filing systems - not just the electronic kind - will for the first time be brought within the scope of data protection law.

This last provision has conjured fearful images of sacked workers suing employers, and of managers combing through personnel files, consigning personal records, etc, to the shredder. And not just these. Most businesses have a multiplicity of filing systems - every branch bank manager will have confidential files on borrowers. 'Yes,' says Alison Ward, an assistant director at the British Bankers' Association, 'it (combining all this data into coherent litigation-proof systems) will be a costly business' for the banks. The consolation is that the new regime for manual files may not be fully in force until the year 2010.

Meanwhile, some users of electronic data have more cause for concern than others. Rowan Freeland, a partner in City solicitors Simmons & Simmons, points out that while all businesses are likely to have additional bureaucratic costs, those which rely heavily on obtaining personal data from third parties - such as direct marketing and credit referencing - could be particularly inconvenienced. Mia Thomas, a legal adviser at the Confederation of British Industry, adds pharmaceuticals and airlines to the list of potentially vulnerable sectors: the first because clinical trials depend on people not knowing whether they've been given the drug or the placebo; the second because of difficulties about transferring data outside the EU.

But 'the law is something you have to live with', as Ward observes, and there is no point in fighting lost battles. The document signed in Luxembourg was the result of five years of negotiation, the DMA's Fricker points out. ('The wording of the first draft was horrendous.') So even those industries most threatened generally affect a lack of concern. 'British Airways' view is that it is a reasonable balance between the airline's needs and those of the individual,' says spokesman David Snelling, while admitting that the law could have an impact on booking procedures. Eileen Basgallop, company secretary of Equifax Europe (UK), a credit reference agency, confesses to concern over 'the continued availability of the electoral role', etc, 'but our basic view is that we accept it as a good thing'.

But many such provisos could depend on how the Directive is translated into UK law. In order to get it adopted at all, notes Fricker, 'the Commission had to leave a number of articles vague'. So a great deal depends on what the Government chooses to do. The Government has already indicated that it 'intends to go no further than is absolutely necessary', which probably means issuing regulations.

Those most affected want a precise interpretation - and a liberal one from a business viewpoint - enshrined in primary legislation.

To leave uncertainties to be resolved in the courts, they argue, would be the worst of all worlds.

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