If your business handles personal data – and almost all do – then getting data protection wrong can damage it financially, legally, and reputationally.
Whether you're a controller or processor, your obligations under the UK GDPR and Data Protection Act 2018 are real, as are the consequences of non-compliance. Regulatory fines, legal claims, public scrutiny, and lasting reputational damage are all on the table.
If you're a business owner or in-house counsel, or you manage operations, compliance, HR, marketing, IT, or data security – or you're a data protection officer – data protection should be on your agenda. Whether you're handling customer information or employee records, taking data compliance seriously is essential to minimise breach risks and safeguard your business. Here, our data protection solicitors break down what can go wrong, the penalties you could face, and the practical steps you can take to protect your business.
Contents:
- Regulatory action: What the ICO can do
- Reputational damage: A risk you can’t ignore
- Compensation claims and complaints: Legal exposure explained
- The operational cost of getting data protection wrong
- When data protection failures lead to criminal liability
- How do you reduce your data protection risk?
- The case for proactive compliance
Regulatory action: What the ICO can do
As the UK’s data protection regulator, the Information Commissioner’s Office (ICO) ensures that businesses comply with data protection laws. It exercises its enforcement powers independently. It can act if the ICO identifies a serious compliance issue within your business.
Under the UK GDPR, the ICO has various investigative, corrective, authorisation, and advisory powers. Depending on the circumstances, it may exercise its powers to conduct audits, require information from controllers and processors, access premises, and investigate alleged breaches. Its corrective powers include issuing warnings and reprimands, ordering compliance, restricting processing, and imposing administrative fines.
Some of its key powers include:
- Requesting information – If the ICO suspects non-compliance, it can request that you provide specific details.
- Enforcing compliance – If the ICO finds that your business has breached UK GDPR, it can issue an enforcement notice requiring you to take corrective action.
- Imposing fines – This is the big risk that’s hit the headlines.
- Conducting inspections and audits – If the ICO has concerns about its data protection practices, it can conduct audits to assess compliance.
- Issuing reprimands –The ICO can issue reprimands, which are formal warnings, generally where the ICO doesn’t feel stronger enforcement action is justified.
The ICO assesses penalties based on factors such as the severity of the breach and its impact on individuals. For the most serious breaches, e.g., failing to comply with data protection principles, the ICO can fine up to £17.5 million or 4% of annual global turnover, whichever is higher – ‘the higher maximum’. For breaching other provisions, the ICO can fine up to £8.7 million or 2% of annual global turnover – ‘the standard maximum’.
The ICO won’t always penalise every business that makes a mistake. If your business takes immediate steps to address an issue and improve compliance, the regulator might seek to work with you and help you rather than penalise you. However, if you ignore warnings, repeatedly fail to comply, or knowingly violate the law, enforcement action might become a real risk.
Reputational damage: A risk you can’t ignore
Although financial penalties can be significant, damage to your reputation could have even worse and long-term consequences.
The ICO publishes details of certain enforcement actions (for all to see), which means that if your business is investigated or fined, this information could be made public. As part of due diligence, a quick internet search could uncover news of enforcement against you and scare away potential customers or investors.
Plus, data protection horror stories such as data breach shocks can quickly hit the headlines and cause panic and a negative brand image. Remember, you’re operating in a world where data safety is key. So, your customers, clients, suppliers, investors and staff expect you to handle personal data securely and responsibly. If news of a data breach or regulatory investigation becomes public, you could quickly lose customer confidence, strain your supplier relationships, and find it much harder to attract new business.
Once trust is gone, if you’re seen as breaching UK GDPR or having poor data practices, rebuilding your reputation can be a slow and difficult process, and it could also result in losing your competitive edge.
Compensation claims and complaints: Legal exposure explained
Even if your business avoids a fine from the ICO, individuals affected by a data breach can seek legal action against you under UK GDPR. Individuals have the right to sue for compensation where they suffer material or nonmaterial damage due to a data protection breach.
Individuals also have the right to lodge a complaint with the ICO if they believe their personal data has been abused in violation of the UK GDPR.
The operational cost of getting data protection wrong
Even if you avoid fines or legal claims, dealing with the fallout from a compliance failure can be a business headache and cost you.
If customers raise complaints, the ICO launches an investigation, or legal disputes arise, you will likely need to allocate time, money, and resources to handle the issue. For instance, if you suffer a data breach, you could face huge costs in remedial action, getting legal advice, and losing customers.
Getting your house in order from the outset is critical. With compliance advice and implementing compliant policies and procedures, you can focus on your business and trading rather than dealing with compliance problems that could hit your growth and bottom line.
When data protection failures lead to criminal liability
Certain data protection offences can result in criminal prosecution if the other risks aren't alarming enough. For instance – criminal offences can occur when unlawfully obtaining or altering personal data.
More reason for you to focus on compliance and work hard to get it right.
How do you reduce your data protection risk?
Unfortunately, it’s hard to guarantee that there will never be any risks with data protection. We are all human, and mistakes happen – especially given the huge volumes of data businesses today process in everyday business.
Taking a robust and proactive approach to data protection will help mitigate risks and calm your mind.
Here are some ways you can strengthen your data protection law compliance to reduce risk:
- Regularly review your data handling practices – Focus on compliance on an ongoing basis and assess how your business processes personal data over time. Spotting risks and compliance gaps early will let you fix them before they escalate into serious issues and potential breaches of data protection laws.
- Keep up with legal developments and stay agile – Data protection laws move quickly. Staying informed about UK GDPR updates, ICO guidance, and best practices will help you maintain compliance over time.
- Implement strong security measures – Security threats are ongoing, and cybercriminals are becoming increasingly sophisticated. So, use strong security measures to protect personal data from unauthorised access or breaches, and keep testing and improving your security where possible.
- Train your teams and really make sure they understand – Many data breaches happen due to human error. So, ensure you have the right data protection policies in place, which your staff can use to manage data effectively, and that your staff understand the importance of compliance. Educate your staff on their data protection responsibilities to reduce the risk of mistakes. Consider whether you should invest in data protection training for your employees. Taking extra measures could help you protect your business from breaches and fines and can also help demonstrate your accountability and reduce risk
- Develop strong policies, such as a data breach response plan – Policies will help you stay on the right track. Even with strong security, personal data breaches can still occur. A well-prepared response plan will help you act quickly to contain the breach and, if necessary, notify affected individuals and the ICO on time.
The case for proactive compliance
If you breach data protection laws, a lot can go wrong. As such, proactively addressing data protection risks is the best step you can take to avoid the risks of getting data protection wrong.
If you’re unsure about compliance, working with a data protection lawyer can help you prevent critical mistakes. Legal advice is highly recommended given the number of obligations under UK GDPR and the ways you could quickly fall in breach. A data protection audit (and refresher audits) is a strong way to address compliance holistically across your operations and stay compliant over time.
If you need help understanding your obligations and getting this right, our data protection solicitors are here to help. We’ll assess your organisation’s compliance with data protection legislation and help pinpoint areas of weakness that could lead to risk.
