FCA, ICO and FSCS warn insolvency practitioners and authorised firms on data use

The Financial Conduct Authority (FCA), the Information Commissioner’s Office (ICO) and the Financial Services Compensation Scheme (FSCS) have issued a joint statement warning insolvency practitioners and FCA-authorised firms to be responsible when dealing with personal data.

The organisations are aware that some insolvency practitioners and FCA-authorised firms have attempted to sell clients’ personal data to claims management companies unlawfully. This can happen either before or after a firm has gone into administration and where it’s likely claims for compensation will be made to the FSCS.

The Terms and Conditions and clauses within a standard contract are highly unlikely to constitute sufficient legal consent for personal data to be shared with CMCs to market their services and may not be lawful.

By passing on personal data, companies may be failing to meet their obligations under the Data Protection Act 2018 and the General Data Protection Regulation (GDPR).

Any subsequent direct marketing calls, texts or e-mails carried out by CMCs may breach the Privacy and Electronic Communications Regulations 2003.

CMCs are required to act honestly, fairly and professionally in line with the best interests of their customers, as  stated in the FCA’s Handbook. CMCs using such personal data may not be acting in the customers’ interests. CMCs seeking to rely on legitimate interest grounds for processing such data are highly unlikely to meet the requirements of the GDPR.

CMCs that intend to buy and use such personal data must be able to demonstrate how they have considered the fair treatment of customers and how their actions comply with privacy laws.

The joint statement concludes: “Where the FCA or the ICO identify breaches of the relevant data protection legislation, or the Claims Management: Conduct of Business Source Book, or any other relevant parts of the FCA’s Handbook, we will take appropriate action.”

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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