Data loss fines hit £500K from today

From Tuesday 6 April, the Information Commissioner’s Office (ICO) will get enhanced powers to fine organisations up to £500,000 for serious breaches of the Data Protection Act. Previously the maximum fine was a paltry £5,000.

The tougher measures will be imposed alongside compulsory audit notices to central government departments found culpable for data breaches. The new powers for the UK's privacy watchdog are designed to deal with serious personal data breaches that arise through negligent behaviour. Precautions an organisation had previously applied as well as the circumstances of a breach will be taken into account in deciding a fine.

Revised guidelines (pdf) state that the most severe fines will be imposed in cases where the "data controller has seriously contravened the data protection principles and the contravention was of a kind likely to cause substantial damage or substantial distress".

The enhanced powers for the ICO were approved by parliament three months ago. However a recent survey found that two thirds of 500 city workers (65 per cent) are still blissfully unaware that they could cost their organisation £500K if their actions cause a “deliberate or negligent” breach of personal data. The study, sponsored by Cyber-Ark Software, found that employers are often doing little or nothing to inform workers of important changes in UK data privacy rules.

The survey found that 64 per cent of those quizzed carry customer data on mobile devices, with only 12 per cent using encryption to protect data from prying eyes in the event of a loss. A further 50 per cent of mobile devices are protected only by basic password defences, and 38 per cent store sensitive data without any protection at all.

CyberARk called on firms to develop and apply appropriate security policies to minimise the impact of device loss, which now carries the possibility of much larger fines.

However other security watchers are unconvinced that the increased fines alone will prompt major changes in behaviour by corporates, at least in the short term. That's because far too many organisations still reckon that data breaches are something that happen only to other people, despite reports of data loss stories almost every day.

Chris McIntosh, CEO of Stonewood, said:

Despite the danger to reputation and business that can come from a data loss, it is still a hard truth that many organisations feel they will be one of the fortunate few that remain untouched. As a result, planning for options such as encryption and the correct handling of data is put off for another day.

While this report will be a useful tool to those seeking to convince their organisations to secure data, it does not address the crucial issue of organisations trusting to luck.

Amichai Shulman, chief technology officer with data security specialist Imperva, drew parallels between the enforcement of the DPA and that of the Payment Card Industry Data Security Standards (PCI DSS) imposed on credit card merchants.

"PCI DSS," he explained, "takes the pragmatic approach of defining exactly what has to be done and effectively giving the IT manager a blueprint for their data security plans." ®