The Gamekeeper’s Fear of the Penalty

Amongst the hype over the end of negotiations over the new EU Data Protection Regulation, one theme kept emerging again and again: Big Penalties. It’s understandable that people might want to focus on it. The UK goes from a maximum possible penalty of £500,000 to one of just under £15,000,000 (at today’s Euro conversion rate) or even 4% of a private enterprise’s annual worldwide turnover. Only a fool would say that it wasn’t worth talking about. It’s much more interesting than the bit about Codes of Practice, and it’s easier to explain than the section about certification bodies.

It would be equally foolish to assume, however, that penalties on this scale will rain down from Wilmslow like thunderbolts from Zeus. At the same time as many were talking up the future, the Information Commissioner issued two monetary penalties under the current regime, one under Data Protection (£250 for the Bloomsbury Patient Network) and one under the Privacy and Electronic Communications Regulations (£30,000 for the Daily Telegraph). The £250 penalty is the lowest the ICO has ever issued for anything, while the PECR one is the lowest for a breach of the marketing rules, notwithstanding that the Daily Telegraph is probably the richest PECR target at which the ICO has taken aim.

You could argue that the embarrassment caused to the Telegraph carries an added sting (the ICO has never before taken enforcement action against a newspaper). It’s equally likely that the oligarchs who own the paper will consider £30,000 (£24,000 if they pay up in 35 days) to be a price worth paying if it had the desired effect on the outcome of a very close election. They’ll probably do it again.

In any case, the Bloomsbury Patient Network CMP is much worse. The Regulation calls for monetary penalties to be effective, proportionate and dissuasive, and yet everybody at the ICO thought that a £250 penalty, split between three people, was action worth taking and promoting. The Commissioner himself, Christopher Graham told the DMA in March 2015 that the ICO was not a ‘traffic warden‘, but if the Bloomsbury Three pay up on time, the £66.67 penalty they each face is no worse than a parking ticket you didn’t pay in the first fortnight.

The ICO’s press release claims that the penalty would have been much higher if the data controller had not been an ‘unincorporated association’, but this is irrelevant. The ICO issued a £440,000 PECR penalty against two individuals (Chris Niebel and Gary McNeish) in 2012, while the Claims Management Regulator recently issued a whopping £850,000 penalty against Zahier Hussain for cold calling and similar dodgy practices. The approach on PECR and marketing is positively steely. The problem clearly lies in Data Protection enforcement, and that is what the Regulation is concerned with.

The size and resources of the offending data controller are a secondary consideration; the test is whether the penalty will cause undue financial hardship. The ICO could bankrupt someone or kill their business if they deserved it. The Bloomsbury Patient Network’s handling of the most sensitive personal data was sloppy and incompetent, and had already led to breaches of confidentiality before the incident that gave rise to the penalty. Enforcement action at a serious level was clearly justified. Even if the level of the penalty was high enough to deter well-meaning amateurs from processing incredibly sensitive data, this would be a good thing. If you’re not capable of handling data about a person’s HIV status with an appropriate level of security, you have absolutely no business doing so at all, no matter good your intentions are. Donate to the Terence Higgins Trust by all means, but do not touch anyone’s data. If the ICO lacks the guts to issue a serious penalty, it would be better to do nothing at all and keep quiet, rather than display their gutlessness to the world.

Whoever made this decision cannot have considered what message it would send to organisations large and small who already think of Data Protection as pettifogging red tape, low on the agenda. Is there an organisation anywhere in the country that would consider the slim chance of being fined £66.67 to be a deterrent against anything. A fine is a punishment (it has to cause pain to those who pay it) and it is a lesson to others (it has to look painful to the wider world). The Bloomsbury Patient Network CMP is neither.

Despite the increased expectations raised by the GDPR, the ICO is actually losing its appetite for DP enforcement, with 13 Data Protection CMPs in 2013, but only 6 in 2014 and 7 in 2015. Meanwhile, there have been 24 unenforceable DP undertakings in 2015 alone, including one against Google which you’re welcome to explain the point of, and another (Flybe) which revealed endemic procedural and training problems in the airline which are more significant than the moronic cock-ups that went on at the Bloomsbury Patient Network. Wilmslow is so inert that two different organisations have told me this year that ICO staff asked them to go through the motions of self-reporting incidents that ICO already knew about, because the only way the enforcement wheels could possibly begin to turn was if an incident was self-reported. ICO staff actually knowing that something had happened wasn’t enough. It’s these same timid people who will be wielding the new powers in 2018.

Admittedly, there will be a new Commissioner, and it’s possible that the Government will pick a fearsome enforcement fiend to go after Data Protection like a dog in a sausage factory. You’ll forgive me if I don’t hold my breath. Nevertheless, something in Wilmslow has to change, because the General Data Protection Regulation represents a clear rebuke to the ICO’s DP enforcement approach.

Most obviously, in the long list of tasks in Article 52 that each Data Protection Authority must carry out, the first is very powerful: they must “monitor and enforce” (my emphasis) the application of the Regulation. Someone recently said that in certain circumstances, some organisations require a ‘regulatory nudge’, but the Regulation is much more emphatic than that. The ICO’s preference for hand-holding, nuzzling and persuading stakeholders (especially those where former ICO colleagues have gone to work) is a world away from an enforcement-led approach.

The huge increase of penalties throws down the gauntlet, especially when the ICO has rarely approached the current, comparatively low UK maximum. But the ICO should also pay close attention to the detail of Article 79 of the Regulation, where the new penalties are laid out. Of the 59 ICO monetary penalties, 57 have been for breaches of the 7th principle (security). The Regulation has two levels of penalty, the lower with a maximum of €10,000,000 (or 2% of annual turnover), and the higher with a maximum of €20,000,000 (or 4% of annual turnover). Breaches of Article 30, a very close analogue to Principle 7, is in the lower tier.

Admittedly, the higher penalty applies to all of the principles in Article 5 (which in a somewhat circular fashion includes security), but it explicitly covers “conditions for consent“, “data subject rights” and infringements involving transfers to third countries, areas untouched by the ICO’s DP penalty regime. The Regulation envisages monetary penalties at the higher level for processing without a condition, inaccuracy, poor retention, subject access as well as new rights like the right to be forgotten or the right to object. The ICO has issued a solitary penalty on fairness, and just one on accuracy – it has never fined on subject access, despite that being the largest single cause of data subject complaints.

The Regulation bites hard on the use of consent and legitimate interest, and misuse of data when relying on them would again carry the higher penalty. Most organisations that rely on consent or legitimate interest are outside the public sector, who rely more on legal obligations and powers. Indeed, the Regulation even allows for the public sector to be excluded from monetary penalties altogether if a member state wishes it. Nevertheless, since they got the power to issue them, only 24% of the ICO’s civil monetary penalties have been served on organisations outside the public sector (2 for charities and 12 for private sector).

I doubt the ICO is ready for what the Regulation demands, and what data subjects will naturally expect from such a deliberate attempt to shape the enforcement of privacy rights. The penalties are too low. The dwindling amount of DP enforcement is based almost exclusively on self-reported security breaches. While the Regulation might feed a few private sector cases onto the conveyor belt by way of mandatory reporting of security breaches, it will do nothing for the ICO’s ability to identify suitable cases for anything else. Few ICO CMPs spring from data subject complaints, and anyone who has ever tried to alert Wilmslow to an ongoing breach when they are not directly affected knows how painful a process that can be. The ICO has not enforced on most of the principles.

It’s been my habit whenever talking about the Regulation to people I’m working for to emphasise the period we’re about to enter. There are two years before the Regulation comes into force; two years to get ready, to look at practice and procedure, two years to tighten up. The need to adapt to the future goes double for the Information Commissioner’s Office. Instead of canoodling with stakeholders and issuing wishy-washy guidance, wringing its hands and promising to be an ‘enabler’, the ICO should take a long hard look in the mirror. Its job is to enforce the law; everything else is an optional extra. It’s wise to assume that the wish for total DP harmonisation will probably be a pipe dream; it’s equally obvious that the Regulation will allow for much easier comparisons between EU member states, and the ICO’s lightest of light touches will be found wanting.