Under the GDPR, the default position is to give the individual choice and control over how their personal data is used.
Banks and financial institutions that fail to take responsibility in this way – and we can see that most recently with the troubles encountered by TSB in rolling out its IT system – will lose customers, goodwill and ultimately shareholder value.
Conversely, those that demonstrate good data governance will find customers trusting them more and sharing more personal data, not less and that in turn will convert into stronger margins and revenues.
To achieve this, banks and financial institutions must be seen to do the right thing, because it’s the right thing to do rather than appear to be complying with some legal minimum standard.
I heard today from a very senior colleague at IBM that many executives in the banking and financial services sector are less concerned about doing the right thing because it’s the right thing to do but are motivated by not wanting to be the bottom of the class when it comes to data protection, privacy and security compared with their peers.
Does this strike you as having got your priorities sorted out under the GDPR and putting the interests of the customers at the centre of your thinking?
Better not repeat this to the Financial Conduct Authority when they check up on how you’re getting on with your GDPR plans, post-25 May.
It’s less about regulation and much more about reputation.
This was exactly the message the current Lord Mayor Charles Bowman was keen to deliver to the City when he asked me to run a special GDPR workshop for the Livery Companies at the end of February this year.
In many respects, the Lord Mayor’s ‘Trust in Business’ programme underpins pretty much all the moving parts in the GDPR where the focus is on the opportunity to do more, not less, with personal data.
Choosing to process personal data under the basis of ‘legitimate interest’ as one of the six legal grounds – others include consent, contract and a legal obligation – may look attractive.
But does it feel creepy or cool from the point of view of the customer? Remember, you haven’t sought consent to carry out this processing of personal data, so you need to be absolutely certain it’s the most appropriate legal basis for doing so.
Choosing legitimate interest as a basis for processing personal data rather than one of the other legal grounds places a higher burden on the shoulders of the bank and financial institution.
Guidance from the ICO is clear on this point:
- ‘Legitimate interests’ are the most flexible lawful basis for processing, but you can’t assume it will always be the most appropriate.
- It’s likely to be most appropriate where you use people’s data in ways they’d reasonably expect and which have a minimal privacy impact, or where there’s a compelling justification for the processing.
- If you choose to rely on ‘legitimate interests’ you are taking on extra responsibility for considering and protecting people’s rights and interests.
And remember, legitimate interest isn’t a quick fix – the Data Subject has an absolute right under the GDPR to receive a Data Privacy Notice and again, can object to the processing of their personal data. The burden of proof isn’t on them – it’s on you to show a legitimate interest.
Legitimate interest may be considered where:
- another lawful basis isn’t available due to the nature and/or scope of the proposed personal data processing or
- where there are a number of lawful bases that could be used but legitimate interest is the most appropriate.
When considering the lawful basis that’s most appropriate to rely on for the processing of personal data, the Data Controller should take account of the privacy rights of individuals under each lawful basis of processing.It’s important to note that these rights may differ depending on which lawful basis a Data Controller may choose to rely on.
For example, if a Data Controller relies on legitimate interest for profiling activities of customers, the Data Subject has the right to object to profiling under Art.21, GDPR.
However, if the Data Controller uses consent for its profiling activities, the Data Subject doesn’t have this right to object but can withdraw consent at anytime.
Fans of legitimate interest argue that the Data Controller may wish to rely on the ground of legitimate interest as it has the opportunity to defend its decision, whereas when consent is withdrawn, the personal data processing must cease immediately.
Recitals 47-50, GDPR describe circumstances under which a Data Controller may have a legitimate interest:
- Direct marketing to prospects and customers
- Reasonable expectation of processing the personal data
- Where there’s a relevant and appropriate relationship
- Where it’s strictly necessary for the purposes of preventing fraud
- Where personal data is being processed within an organisational group
- Necessary and proportionate for the purpose of ensuring network and information security.
Unfortunately, legitimate interest is far from a catch-all justification.
Banks and financial institutions will need to prove their just use of legitimate interest and will have to fully assess their legitimate interest vis-à-vis the rights, freedoms and interests of individuals, notify them of this interest and uphold individual objections unless there are compelling reasons for processing the personal data.
And if you choose to go down the legitimate interest route, don’t expect universal applause.In many respects, legitimate interest is an ‘expectation test’ that requires you to consider whether a Data Subject can reasonably expect their personal data to be processed in this way.
In other words, will it be creepy or cool?
The GDPR Handbook by Ardi Kolah is out June 3rd, published by Kogan Page, priced £49.99. For more information go to www.koganpage.com
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England might need to cut interest rates below zero later this year or in 2022 if a recovery in the economy disappoints, especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.
Vlieghe said he thought the likeliest scenario was that the economy would recover strongly as forecast by the central bank earlier this month, meaning a further loosening of monetary policy would not be needed.
Data published on Friday suggested the economy had stabilised after a new COVID-19 lockdown hit retailers last month, while businesses and consumers are hopeful a fast vaccination campaign will spur a recovery.
Vlieghe said in a speech published by the BoE that there was a risk of lasting job market weakness hurting wages and prices.
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said.
“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.
Vlieghe’s comments are similar to those of fellow policymaker Michael Saunders, who said on Thursday negative rates could be the BoE’s best tool in future.
Earlier this month the BoE gave British financial institutions six months to get ready for the possible introduction of negative interest rates, though it stressed that no decision had been taken on whether to implement them.
Investors saw the move as reducing the likelihood of the BoE following other central banks and adopting negative rates.
Some senior BoE policymakers, such as Deputy Governor Dave Ramsden, believe that adding to the central bank’s 875 billion pounds ($1.22 trillion) of government bond purchases remains the best way of boosting the economy if needed.
Vlieghe underscored the scale of the hit to Britain’s economy and said it was clear the country was not experiencing a V-shaped recovery, adding it was more like “something between a swoosh-shaped recovery and a W-shaped recovery.”
“I want to emphasise how far we still have to travel in this recovery,” he said, adding that it was “highly uncertain” how much of the pent-up savings amassed by households during the lockdowns would be spent.
By contrast, last week the BoE’s chief economist, Andy Haldane, likened the economy to a “coiled spring.”
Vlieghe also warned against raising interest rates if the economy appeared to be outperforming expectations.
“It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
Higher interest rates were unlikely to be appropriate until 2023 or 2024, he said.
($1 = 0.7146 pounds)
(Reporting by David Milliken; Editing by William Schomberg)
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month hit retailers, and business and consumers are hopeful the vaccination campaign will spur a recovery, data showed on Friday.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index, a survey of businesses, suggested the economy was barely shrinking in the first half of February as companies adjusted to the latest restrictions.
A separate survey of households showed consumers at their most confident since the pandemic began.
Britain’s economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.
The central bank expects a strong subsequent recovery because of the COVID-19 vaccination programme – though policymaker Gertjan Vlieghe said in a speech on Friday that the BoE could need to cut interest rates below zero later this year if unemployment stayed high.
Prime Minister Boris Johnson is due on Monday to announce the next steps in England’s lockdown but has said any easing of restrictions will be gradual.
Official data for January underscored the impact of the latest lockdown on retailers.
Retail sales volumes slumped by 8.2% from December, a much bigger fall than the 2.5% decrease forecast in a Reuters poll of economists, and the second largest on record.
“The only good thing about the current lockdown is that it’s no way near as bad for the economy as the first one,” Paul Dales, an economist at Capital Economics, said.
The smaller fall in retail sales than last April’s 18% plunge reflected growth in online shopping.
BORROWING SURGE SLOWED IN JANUARY
There was some better news for finance minister Rishi Sunak as he prepares to announce Britain’s next annual budget on March 3.
Though public sector borrowing of 8.8 billion pounds ($12.3 billion) was the first January deficit in a decade, it was much less than the 24.5 billion pounds forecast in a Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting a surge in spending and tax cuts ordered by Sunak.
The figure does not count losses on government-backed loans which could add 30 billion pounds to the shortfall this year, but the deficit is likely to be smaller than official forecasts, the Institute for Fiscal Studies think tank said.
Sunak is expected to extend a costly wage subsidy programme, at least for the hardest-hit sectors, but he said the time for a reckoning would come.
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” he said.
Some economists expect higher taxes sooner rather than later.
“Big tax rises eventually will have to be announced, with 2022 likely to be the worst year, so that they will be far from voters’ minds by the time of the next general election in May 2024,” Samuel Tombs, at Pantheon Macroeconomics, said.
Public debt rose to 2.115 trillion pounds, or 97.9% of gross domestic product – a percentage not seen since the early 1960s.
The PMI survey and a separate measure of manufacturing from the Confederation of British Industry, showing factory orders suffering the smallest hit in a year, gave Sunak some cause for optimism.
IHS Markit’s chief business economist, Chris Williamson, said the improvement in business expectations suggested the economy was “poised for recovery.”
However the PMI survey showed factory output in February grew at its slowest rate in nine months. Many firms reported extra costs and disruption to supply chains from new post-Brexit barriers to trade with the European Union since Jan. 1.
Vlieghe warned against over-interpreting any early signs of growth. “It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
“We are experiencing something between a swoosh-shaped recovery and a W-shaped recovery. We are clearly not experiencing a V-shaped recovery.”
($1 = 0.7160 pounds)
(Editing by Angus MacSwan and Timothy Heritage)
Oil extends losses as Texas prepares to ramp up output
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Brent crude futures were down 33 cents, or 0.5%, at $63.60 a barrel by 11:06 a.m. (1606 GMT) U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1%, to $59.92.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil fell despite a surprise drop in U.S. crude stockpiles in the week to Feb. 12, before the big freeze. Inventories fell by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jason Neely, David Goodman and David Gregorio)
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