Asset and wealth managers have begun work on staying General Data Protection Regulation (GDPR)-compliant in efforts to avoid financial penalties and prevent costs from soaring “significantly” as the regulation comes into force.
GDPR, which came into effect on 25 May, aims to modernise data law and give consumers the right to know much more about how their information is used
The introduction of GDPR means all firms will have to implement more stringent practices, ensuring data is better stored with adequate checks and processes in place to protect it.
Recent research carried out by law firm Wedlake Bell found GDPR was ranked as the most significant piece of regulation in terms of drivers for change in the asset and wealth management sector this year, ahead of MiFID II and the Common Reporting Standard.
Over the course of 2017, the Information Commissioner’s Office (ICO), which will police the new regulations, handed out £4.9m in data privacy fines, with 44% of penalties directed at financial services.
So far in 2018, the ICO has already shown its teeth before the regulation has even taken effect, with £1.7m in fines in January alone and individual penalties worth hundreds of thousands of pounds announced each week.
Managing director of applied analytics at tech firm DST Systems Ruaraidh Thomas said while the headlines about GDPR have focussed on the cost of getting compliant, “the costs of managing your business post-GDPR is something that will increase significantly if you do not get this right”.
He explained: “You need to communicate well and be unambiguous in the way you communicate with regulators or customers. That is part of the challenge of this as it is a huge ongoing exercise.”
Under GDPR, asset and wealth managers with “EU natural person” clients are considered “controllers” and are therefore responsible for the data of those clients.
Head of legal at investment software provider SS&C Technologies Orly Lax explained asset managers now need to focus on “collecting the data in a lawful, transparent way”.
Asset Management Correspondent