It was reported yesterday that the Irish Government has issued a â€œdiscussion paperâ€ on the proposed administrative sanctions under the new Data Protection Regulation.
EDRI has criticised the proposals with reference to the â€œwarning/dialogue/enforcementâ€ approach taken by the Irish DPC. Billy Hawkes has, in the past, been at pains to clarify that the Irish DPC uses dialogue to encourage compliance and also seeks to encourage organisations to raise questions and issues with the DPC to avoid breaches. There is a belief that the â€œbrand impactâ€ of even being spoken to by the DPC about an issue can prompt â€œroad to Damascusâ€ conversions in organisations.
That is all well and good, but my experience working with organisations is that this can result in management playing a game of â€œmental discountingâ€ (Iâ€™ve written about this before in response to the original draft DP Regulation). If there is a perception that the probability of an actual penalty is low, there is little leverage in appealing to intrinsic motivation of a business manager when his extrinsic drivers for behaviour are pushing the decision towards a â€œsuck it and seeâ€ approach.
Having re-read the discussion paper and EDRIâ€™s response to it I canâ€™t help feel that EDRI may be over-stating the â€œaskâ€ that is being made here a small bit. They cite it as the â€œdestruction of the right to privacyâ€, citing the Irish DPCâ€™s own experiences with the Garda Pulse system which has been plagued by reports of breaches in Data Protection since its introduction, despite the GardaÃ having a statutory Code of Practice for Data Protection. In 2010 the DPC reported that that Code of Practice was not being implemented in the GardaÃ.
However, this says as much to to me about the attitude to Data Protection in some (but not all) parts of the Irish Public Service then it does about the merits of the Data Protection Commissionerâ€™s approach to encouraging compliance or the specifics of anything that might be discussed on foot of this discussion paper. Furthermore it raises questions for me about the capability and resources that the Data Protection Commissioner has to execute their function effectively in Ireland, and even suggests that there may be informal barriers to the effective operation of their function in the public sector which need to be urgently considered (given that the Office of the DPC is supposed to be independent).
Given the extent of the negative findings in the interim report on the 2012 audit of the PULSE system I personally would hope that there would be some level of penalty for the Garda Siochana for failing to follow their own code of practice. But that is a different issue to what the Discussion paper actually raises.
What is being discussed (and what would I like them to consider?)
The Discussion Paper that was circulated invites Ministers at an Informal Council meeting to consider (amongst other things):
- If wider provision should be made for warnings or reprimands, making fines optional or at least conditional upon a prior warning or reprimand;
- if supervisory authorities should be permitted to take other mitigating factors, such as adherence to an approved code of conduct or a privacy seal or mark, in to account when determining sanctions.
It flags the fact that the Regulation, as drafted, allows for no discretion in terms of the levying of a penalty. What is proposed here in the discussion is a discussion of whether warnings or the making of fines optional would be the mechanism to go to rather than scaring the bejesus out of people with massive fines. This in itself doesnâ€™t kill the right to Privacy, but it does potentially create the environment where the fundamental Right to Privacy will die, starved of any oxygen of effective enforcement.
Bluntly â€“ when faced with a toothless framework of warnings and vague threats, businesses and public sector bodies will (and currently do) play a game of mental discounting where the bottom line impact (in terms of making money or achieving a particular goal) outweigh the other needs and requirements of society. So an organisation may choose to obtain information unfairly or process it for an undisclosed secondary purpose because it will hit its target in this quarter and the potential monetary impact wonâ€™t emerge for many more months or years, after an iterative cycle of warnings. The big penalty will be seen as something â€œfar awayâ€ that can be worried about later. After everyoneâ€™s got their bonuses or their promotions etc.
If strict statutory liability is the model that is being proposed, and the discussion is to look at watering it down to a stern talking to as a matter of formal policy in the Regulation, I must despair of the wingnuts in my government who even thought that would be a good idea to even suggest this. But I do agree that tying the hands of the Regulators to the big ticket monetary penalties might not work in their interests or in the interests of encouraging compliance with the legislation.
What is needed is a middle ground. A mechanism whereby organisations can make errors of judgement and be warned, but that the warning will have some sanction with it. The sanction needs to be non-negotiable. But it needs to be transparent and obvious that this is what will happen if you ignore DP rules. It needs to be easily enforced and managed. There should be a right of appeal, but appealing the non-negotiable fixed-penalty should carry with it the risk of greater penalties. And the ability of an organisation to benefit from iterative small penalties should be removed if they are a recidivist offender.
There is a system that operates like this in most EU countries â€“ it is the Penalty Points system for motoring offences. Hopefully the discussion will move to looking at how a similar system might be implemented for Data Protection offences. The penalties could be tiered (e.g. no cookies notification – â‚¬150 fine and 2 points on first offence, â‚¬500 and 4 points on second, failure to document processing â‚¬500 fine on first offence and 6 points). The points could be cumulative, with the â€œoptionalityâ€ of higher sanctions being removed if you were, for example, an organisation with 100 points against you (congratulations, youâ€™ve failed to up your game and now you are being prosecuted for the full tariff). Organisations bidding for public sector contracts could be required to have a â€œData Protection Pointsâ€ score below a certain level.
This system could be devised in a way that would take account of mitigating factors. If a code of practice was entered in to, and was successfully audited against by an appropriate body, then points could be removed from the â€œscorecardâ€ at the end of a 12 month period. If there were mitigating factors, a lower level category of offence might actually apply (Iâ€™ll admit Iâ€™m not sure how that might work in practice and need to think it through myself a little). Perhaps self-notification to the DPC, engagement in codes of practice, mitigating factors or actions etc. would carry a â€œbonus pointsâ€ element which could be used to off-set the points total being carried by a Data Controller (e.g. â€œadopted code of practice and passed audit: minus 3 points, introduced training and has demonstrated improved staff knowledge: minus 3 points).
Certain categories of breach might be exempt from mitigation, and certain categories of offence, just like with motoring offences, might be a permanent black mark on the organisationâ€™s Data Protection record (e.g.: Failure to engage with DPC in an investigation, failing to take actions on foot of an audit/investigation).
The scheme could be administered at an EU level by the EDPB, with the points accumulated by organisations operating in multiple member states either being cumulative or averaged based on a standardised list of key offences. Member States could be free to add additional offences to this list locally, within the spirit and intent of the Regulation.
That would be an innovative idea, based on a model that has been proven to have an influence on compliance behaviour in motoring. And it would provide a transparent mechanism that would ensure that warnings could be given, advice could be sought, and positive engagement could be entered into by Micro Enterprises, SMEs, and large corporates. It would provide a relatively low impact mechanism for levying and collecting penalties from organisations who are in breach (penalties could potentially be collected as part of annual tax returns as a debt owed to the State), and it could be used to reward organisations who are taking positive actions (â€œbonus pointsâ€).
Finally, it would give the basis of a transparent scorecard for organisations seeking to evaluate data processors or other service providers (in the same way as Insurance providers use penalty points data for motoring to assess driver risk), and it would give a clear escalation path to the full sanctions in the Regulation (e.g. 100 points and you go straight to full penalties).
What it does not give is a death spiral of warnings that donâ€™t amount to penalty and as a result give a platform for organisations to ignore the Right to Privacy. It is an evolution of the conciliatory approach to encouraging compliance but one that is given teeth in a manner that can be transparent, easily explained, and standardised across the EU27.