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Making company directors personally liable

  Article added: 17/12/2018
Directors can now be held personally to account for up to 500000 for nuisance calls and texts

Total fines of up to £1,000,000

Back in May 2017 year we reported on the Information Commissioners Office (ICO) plans to make Company Directors personally liable when they make nuisance calls or send nuisance text or automated voice messages in breach of the Privacy and Electronic Communications Regulations (PECR). PECR sets out the legal parameters for electronic direct marketing in the UK and covers testing automated voice, email and calling people registered on the Telephone Preference Service (TPS) register.

Well, those new rules come into force today 17th December 2018.

This amendment to PECR will give the ICO new powers to fine company directors up to £500,000 for breaches of the PECR.

The Privacy and Electronic Communications (Amendment) Regulations 2018 were laid before the UK parliament on 16th November 2018.

PECR generally prohibits companies from transmitting or instigating the transmission of unsolicited electronic communications to consumers for the purposes of direct marketing unless the person receiving those communications has given prior consent for the messages to be sent or the sender can demonstrate an existing commercial relationship with recipients. The ICO can serve fines of up to £500,000 on companies that breach the rules.

Key Fact

The issue of consent still creates a lot of confusion for many business owners. If in doubt, talk to the ICO directly.

December 2018 PECR Amendment

So you could get fined up to £1,000,000

The new rules will give the ICO scope to fine the company, its directors, or both. And this means that whilst the ICO could fine the business up to £500,000, they can also now fine the directors up to £500,000 as well.

This means that the ICO could hold individual directors to account where the company fails to pay the fine or is placed into liquidation; and where the individual is no longer in a senior position, for example through resignation. The new rules will operate alongside the Insolvency Service’s existing director disqualification regime.

Quoted from the notes attached to the legislation:

“The effect of the amendments made by regulation 2 is to enable the Commissioner to impose such a penalty on an officer of a body corporate or Scottish partnership in addition to the body itself, where such a breach occurs as a result of action, or inaction, by that officer. ”

At the time of its consultation, the government said the changes “would send a strong message to directors that if their business involves direct marketing activities, they need to be sure their customers have agreed to be contacted and their companies are acting within the law”. It said it would also mean that direct marketing laws “are treated more seriously at boardroom level”.

Breaches of TPS are likely to take on a very different process in the future with company directors finding themselves potentially liable in line with the new regulations.

The new Privacy and Electronic Communications (Amendment) Regulations 2018 were laid before the UK parliament on 16 November.

Some companies have previously escaped paying large penalties by declaring bankruptcy, only to open again under a different name, the ICO claims. Business directors will have “nowhere to hide” if their firm breaks the law, the government says.

Minister for digital and creative industries Margot James said:

“We are determined to stamp this menace out and this new law is the latest in a series of measures to rid society of the plague of nuisance calls.”

Andy Curry, of the ICO, said:

“We welcome this amendment to the law, which will increase the tools we have to protect the public.

It will mean we can recover the fine more easily and also make it much harder for unscrupulous operators to set up in business again.”

The ICO issued fines totalling £1.9m to 23 companies for nuisance marketing in the year 2016-2017.

TPS Services Richard Kane said:

“ICO figures show that of the £17.8m in fines issued for nuisance calls since 2010, the ICO has recovered 54% of it, as some companies went into liquidation. This collection figure is surprisingly high in view of the fact that the ICO more often than not appears to go for “fine high for media coverage” rather than “fine realistically and get paid”. A criticism levied at the ICO by many businesses behind closed doors, often too afraid to speak out for fear of reprisal from the ICO.

These additional powers will certainly give the ICO another tool to regulate with and the extra resources it’s recruited over the last year will also potentially allow it to drop the threshold even further before taking action. They may even be able to negotiate fines with companies now that they can threaten the directors personally.

That’s leverage! ”

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