3. Regulatory case studies – regulation of financial services and regulation of the use of personal datas Flashcards
Why look to financial services for a case study?
Everyone needs financial services
Impact when things wrong
LIGHT TOUCH REGULATION
Banks - Flexibility and freedom - led to big profits - risky - Led to sub prime lending USA - banks lending money to people who couldn’t realistically afford to take out loans - risk = high level interest - profit possible - gradually they lost out.
Banks invested in increasingly risky assets in pursuit of higher returns
Sub prime lending in USA
borrower default on huge scale caused losses for Banks
Increasing anxiety about bank solvency – the 2007 Northern Rock crisis:
Worries about losing bank savings - people wanted to withdraw savings. This is called a run on a bank.
Problem banks don’t hold all assets in cash.
Banks weren’t able to give people all money.
Bank of England provided northern rock with emergency funding to provide for this.
The FCA’s statutory objectives
Strategic objective to ensure that relevant markets work well
3 operational objectives
Protect consumers – secure appropriate degree of protection for consumers
Protect financial markets – protect integrity of UK financial system
Promote competition – promote effective competition in the interests of consumers
The work of the FCA
The biggest regulator in the UK
Banking, loans, insurance, pensions, investments – products we all need
Protecting consumers (particularly vulnerable consumers)
regulation
The FCA Handbook
The FCA Principles for Businesses (eg treat customers fairly, act with integrity, ensure communications are clear, fair and not misleading - such as hidden clauses)
fca.org.uk
Who holds data about us? Why should we care?
Banks and insurance companies
Shops
Websites
Why should we care?
Fraud risk
Protecting our privacy
Data might be used to our disadvantage
Cold calling - companies having our phone numbers
The value in our data, and the temptations for mis-use
Business campaigning for more and more freedom - for obvious economic growth freedom.
The law and the regulator for private data
GDPR (driven by concerns throughout EU)
Data Protection Act 2018
The Information Commissioner’s Office
ico.org.uk
principles of data law
The Principles
Lawfulness, fairness and transparency
Purpose limitation
Data minimisation - Only essential data
Accuracy
Storage limitation
Integrity and confidentiality (security)
Accountability
Lawful basis for processing
Consent
Necessary for contract
Legal obligation
Vital interests - Life saving - bank could pass personal data to police if threat of life
The rights of individuals
Right to be informed
Right of access
Right of rectification
Right to erase
Right to data portability - Transferring data from one organisation to another
Right to object
Rights in relation to automated decision making and profiling
why comply with regulations of data law?
Individuals taking action to enforce rights
Enforcement by ICO (e.g. fines)
Reputational damage
BUT – businesses may want to push the limits of compliance
Data Protection and Digital Information Bill
November 2023
“Siezes post Brexit opportunity to create new UK data rights regime”
“Allowing businesses to protect personal data in more proportionate and practical ways than under the EU’s GDPR”
