07 November 2017 by Liz Bradley
Those that proactively engage with the new data protection regulation will reap the rewards
As the end of the year approaches, legal changes with a 2018 implementation deadline are looming large, and one significant imminent regime is the EU General Data Protection Regulation (GDPR), which comes into effect on 25 May 2018.
The UK’s Information Commissioner’s Office (ICO) has described the legislation as ‘an evolution in data protection regulation, not a burdensome revolution’ in its GDPR myth-busting blog series.
Even so, the regulation is a gear-shift in data protection, requiring greater transparency from handlers of personal data, enhancing the rights of individuals over their information and increasing the fines that can be levied for data protection breaches.
Given the pervasiveness of data use across organisations of all shapes and sizes, the changes need careful consideration. Planning will be required to make sure processes comply with the new legal framework and people at all levels of seniority need to be empowered to play their part in keeping data protection on track.
A new ICSA guidance note has been written to assist organisations in their preparations for GDPR. The guidance summarises the requirements of the new regulation, as well as providing more detailed support in checklist-style boxes for those closer to the detail of implementation.
Crucially, the guidance also highlights the pivotal role company secretaries can play in supporting the oversight of data protection by boards and other senior decision-makers.
Our goal is to ensure readers understand the changes that are taking place, and are equipped to participate in the discussions and practical action required as a result.
“The ICO described the legislation as ‘an evolution in data protection regulation, not a burdensome revolution’”
To that end, the guidance has been produced with the assistance of a working group comprised of ICSA members and the law firm Baker McKenzie, ensuring the topic is covered from both a legal and governance perspective.
Any imminent regulatory change can feel intimidating to get to grips with. Particularly where legislation addresses a sprawling subject, like data protection, it helps to take a step back and evaluate the key areas affected by the new framework.
The guidance note sets out three things to focus on: data basics, dealing with individuals and governance and risk management.
Organisations will be hard-pressed to achieve compliance with GDPR’s principles without a clear understanding of their personal data use. This means being able to answer questions about what information is being processed and why, and with whom that data is shared.
Data collection and processing must be justified by one or more of the lawful grounds set out in the regulation. The grounds chosen will have implications for the kinds of rights individuals can assert over the data.
For example, changes to the definition of consent will make it harder to obtain, at the same time giving individuals a right to withdraw consent and request the erasure of data provided on that basis.
GDPR defines the term ‘personal data’, and applies stricter rules to the treatment of data relating to children, sensitive categories of data – for example, relating to race or sexual orientation – and data concerning criminal convictions. It also introduces changes to the existing rules on cross-border transfers of data.
The guidance note is intended to help readers to think through these considerations and begin to systematically build a big picture view of data use within their organisation.
The EU considers the protection of personal data to be a fundamental right.
This is reflected in the breadth of rights given to individuals in relation to their data, including the right to be given certain information (usually within privacy notices); the right to access their own data, or request rectification or erasure of data; and the right to request a restriction to processing or to ask for data to be handed over for use by another processor.
Individuals also have the right not to be subject to automated decision-making.
“It will now be important that records are kept to prove compliance steps are being taken”
The list of possible requests can seem overwhelming at first glance, but GDPR does take into account the position of organisations too.
Most rights can only be asserted in specific circumstances – for example, when data has been collected in a certain way, or is being used for a particular purpose. In some cases, organisations can refuse to accommodate an individual’s request, or at least extend the time frame for complying.
Each right is explained in turn within the guidance. Practical considerations are also flagged to help organisations prepare the necessary processes, so that requests can be dealt with correctly and efficiently.
The days of writing off data protection as an IT issue are long gone, if they ever existed. GDPR compliance will require a joined-up approach to data protection for a number of reasons.
First, a new accountability principle introduced by GDPR requires organisations to objectively demonstrate compliance with all the other principles in the regulation.
This means organisations will need to minimise the amount of data collected, limit the length of time data is retained for, be transparent about data processing, maintain confidentiality, and take all the other necessary steps to meet their obligations.
However, it will now also be important that records are kept to prove these steps are being taken. This documentation exercise will require the cooperation and input of several different teams, in order to show that data protection is truly embedded across the organisation.
Secondly, GDPR formalises the requirement to protect data by design and default. In this context, by design means that whenever business practices, IT processes or physical infrastructures are conceptualised, maintaining privacy, and data security must be integrated at the outset.
Data protection should be integral to the operation of every process, not added on as an afterthought. Data protection by default also means that as a general rule, only the data required for a specific, identified purpose should be processed. Again, these standards are expected to permeate the whole organisation.
Thirdly, higher fines for breaches of the regulation make it appropriate to treat data protection as a key risk area, integrated into the organisation’s risk management framework.
GDPR also requires a number of other procedural issues to be considered, such as the appointment of a data protection officer, the use of data protection impact assessments and a thorough review of processing arrangements to make sure contracts are fit-for-purpose in relation to the new regime.
All these examples illustrate the ways in which data protection is now an issue for the whole organisation. As such, it requires effective governance structures and oversight.
The guidance note explains the requirements mentioned above, and sets out various procedural steps organisations should take to comply. However, it also goes further – prompting readers to think about the wider issues of governance that these requirements raise.
For example, consideration should be given to which committees will have responsibility for reviewing the detail and implementation of data protection measures.
Also, a decision should be made on how often and in what way this information will be relayed to the board or senior decision-makers within the organisation. Readers are also encouraged to think about accountability in specific circumstances, for example if a breach notification needs to be made.
“As with all complex changes, it can be tempting to procrastinate”
Decision-makers at the highest levels will need clear, reliable updates from those more closely involved in the management of data throughout the organisation.
Company secretaries are uniquely placed to act as a conduit for this information, helping those tasked with oversight to raise appropriate questions of management, and respondents by highlighting important or missed considerations.
They can also help shape the structure of the reporting lines and support the relevant committees with managing their workloads.
The guidance is also designed to raise readers’ confidence in performing this important role, by providing clear explanations of GDPR’s provisions and suggestions regarding how to transition to new processes in practical terms.
As with all complex changes, it can be tempting to procrastinate. Organisations must avoid being side-tracked by related discussions that do little to move compliance efforts forward.
For example, many are worrying how Brexit will affect the new regime. The ICO is encouraging organisations to stay focused on preparing for the changes and avoid speculation about the status of these reforms in the future.
GDPR will come into force well before the UK exits the EU, and is supported by parallel national legislation – the Data Protection Bill 2017, currently being considered by the House of Lords.
The message for the time being is one of consistency with the European regulatory regime. The relationship between these two pieces of legislation is also touched on briefly in the guidance note.
GDPR is happening and will in all likelihood continue to be relevant for years to come. Steps taken now should be treated as the beginning of on-going efforts to understand and control data use. It is therefore worth encouraging a positive attitude towards the changes.
Yes, the up-front work required may be significant, depending on each organisation’s starting point, but in getting to grips with the problem, organisations have an opportunity to benefit from improved relationships with individuals – whether current or potential customers, employees, service users or other types of stakeholders.
All organisations need to be ready to comply with the requirements of GDPR. The ICSA guidance note is a tool to help achieve this in practical terms.
Ultimately, those organisations that go further and succeed in creating the general culture of data protection, transparency and accountability envisaged by the regulation will be more likely to be considered trustworthy by the public. And, in the current climate, public trust is a prize worth winning.