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

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

by Brian Sims

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.”

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