General Data Protection Regulation is a ‘game changer’ for the financial services industry and many small firms are unlikely to be fully compliant with the new rules, affirms the boss of deVere Group.
Nigel Green, the founder and chief executive of deVere, one of the world’s largest independent financial services organisations is speaking out two weeks since the implementation of GDPR, a regulation in EU law on data protection and privacy for all individuals within the European Union and the European Economic Area.
Mr Green says: “GDPR is a game changer for the financial services industry – the biggest shake-up I can remember.
“Not only is it protecting clients further by putting them back in control of their personal data, but it is going to make the industry work smarter, harder and better.”
He continues: “One of the main day-to-day ways GDPR will impact financial services is that no longer will firms be able to poach staff asking them to bring client data with them. Unfortunately, this has been a highly unethical modus operandi for many smaller financial companies for far too long. This is now no longer possible.
“Another key way that GDPR will affect the admin operations of financial services companies is the storage and management of the data. Holding data without good reason to do so will no longer be allowed.”
Mr Green goes on to add: “Despite them having ample advance notice, due to the breadth and scope of GDPR, and because it represents a fundamental shift for some companies’ business models, many smaller firms will find it extremely challenging to meet the requirements.
“It is likely that they will have found, and will continue to find, it difficult to dedicate the time and resources to getting this right and being fully compliant – especially as many are still struggling with the costs and demands of Mifid II and other complex regulatory reforms.
“As such, we can expect that many smaller firms will be hit with hefty fines for failing to meet GDPR’s stringent standards.
“Bearing this in mind, GDPR will prove to be a ‘burden’ too heavy for some smaller companies, forcing them to exit the industry.”
The deVere CEO concludes: “GDPR represents a watershed moment for the financial services sector. This is an opportunity for all firms to redouble their efforts to overhaul their business practices where necessary, ensuring the clients’ interests are always front and centre.”