In today's digital age, data protection has become a paramount concern for businesses of all sizes.
Failing to comply with UK GDPR measures could cost your company millions of pounds in damages.
One regulation that has significantly impacted how companies handle data is the UK General Data Protection Regulation (GDPR).
While GDPR covers a broad spectrum of personal data, its implications on financial data are particularly noteworthy and all businesses should strive to remain compliant and robust in line with the relevant regulations.
Below, we outline some of the most important aspects of this complicated subject.
What is GDPR?
GDPR is a European Union (EU) regulation that came into effect on 25 May 2018.
It aims to safeguard the personal data of EU citizens and residents, giving them greater control over how their information is used.
The regulation applies to any organisation that processes the personal data of individuals residing in the EU, regardless of where the organisation is based.
However, now that the UK has left the EU, it is important to note that the post-Brexit version came into force in January 2021. In practice, there is little change to the regulations and the terms ‘GDPR’ and ‘UK GDPR’ are generally interchangeable.
Either way, your business must comply with the general principles of data security and must not compromise the privacy of the individuals whose data you are the holder of.
These could include staff, clients, customers, and suppliers.
Financial data under GDPR
Financial data, such as bank account numbers, transaction history, and credit scores, falls under the category of personal data.
These are, therefore, subject to GDPR regulations.
Businesses must ensure that they have explicit consent to collect and process this data, and they must also provide a clear explanation of how the data will be used.
Data protection measures
One of the key aspects of UK GDPR is the requirement for robust data protection measures, including both technical and organisational safeguards.
For instance, financial data should be encrypted, and access should be restricted to authorised personnel only.
Additionally, businesses must conduct regular audits and assessments to ensure that their financial data protection measures are up to scratch.
Failure to comply with the relevant GDPR regulations could result in severe penalties and fines, which we will discuss below.
Data subject rights
Under GDPR, individuals have the right to access their personal data, correct inaccuracies, and even request the deletion of their data under certain circumstances.
Businesses must be prepared to comply with these requests within a stipulated timeframe, usually one month.
Again, failure to do so can result in hefty fines, so it is important to manage these issues effectively.
Penalties for non-compliance
Non-compliance with UK GDPR can result in severe penalties.
Fines can be up to £17.5 million or 4 per cent of the company's annual global turnover, whichever is higher.
Moreover, the reputational damage can be devastating, leading to a loss of customer trust and potential legal action that could significantly impact your business.
UK GDPR has set a new standard for data protection, and its impact on financial data is significant.
Businesses must be proactive in ensuring compliance to avoid severe penalties and reputational harm.
One of the best ways to protect your business is to outsource your financial data management to a qualified and experienced accountancy firm.
Managing GDPR and its implications on financial data is not just a legal obligation but a crucial step in building a trustworthy and resilient business so allowing the professionals to do this for you is often the most effective method.
To find out how an accountant could manage your financial data in a more secure and safe manner, please get in touch.