Tag Archives: GDPR (Enforcement)

Penalty Notices and Notices of Intent

Yesterday there was a great deal of excitement as some news outlets reported that British Airways had been fined £183m by the Information Commissioner’s Office. It became apparent fairly quickly that this wasn’t what had happened and that we are still waiting for the Commissioner to issue the first “penalty notice” for a breach of the General Data protection Regulation.

What did come to light yesterday was that the Commissioner had issued a notice of intent to British Airways giving them notice that she intends on issuing a penalty notice in the sum f £183m. This is not the first time where news of a notice of intent has resulted in reporting that the Commissioner had actually issued a financial penalty. The last time was when she issued Facebook with a notice of intent in respect of a pre-GDPR breach (a penalty was subsequently served on Facebook in the sum of £500,000 and that penalty is currently the subject of an appeal to the First-Tier Tribunal).

There is quite a bit of difference between a notice of intent and a penalty notice (formally known as a monetary penalty notice in the Data Protection Act 1998) and they shouldn’t be confused with one another. So, given the confusion, I thought I might write a brief guide to the process adopted in the UK in respect of administrative fines under the GDPR and the Law Enforcement Directive.

The process essentially begins with the Commissioner opening an investigation. This could be as a result of a mandatory breach notification by the controller, a complaint made by a data subject or  it having come to the attention of the Commissioner in some other way (for example, via the media). The Commissioner then enters into an information gathering phase, and she has the power to compel (subject to appeal and some other limited exceptions) data controllers to provide her with information by issuing an information notice should data controllers refuse to engage with her office.

At some stage the Commissioner will decide whether enforcement action is appropriate in the particular case. There will have been a dialogue of sorts going on between the Commissioner’s office and the controller during the information gathering phase. A financial penalty is not the only option available to the Commissioner. If the Commissioner decides that an administrative fine (in GDPR language, or “penalty notice” in the language of the Data Protection Act 2018 (“DPA2018”)) might be the appropriate means to deal with the breach, then she is required by Paragraph 2(1) of Schedule 16 to the DPA2018 to the to give written notice to the controller of her intent to do so; this is known as a “notice of intent”. This notice must contain certain information, which is set out in paragraph 3 of Schedule 16 to the DPA2018.

The notice of intent is an important step because, by virtue of paragraph 3(4) of Schedule 16, the notice of intent must contain details of a period in which the controller can make written representations to the Commissioner; this period must not be less than 21 days. The Commissioner is prohibited from serving a penalty notice until this period has expired (paragraph 4(1) of Schedule 16). Furthermore, before deciding to issue a penalty and before finally deciding upon the amount of any penalty, the Commissioner must consider any written or oral representations made by or on behalf of the controller (paragraph 4(2) of Schedule 16).

Essentially, the notice of intent forms part of the due process of law. The Commissioner sets out in the notice the basis upon which she believes a penalty notice is appropriate and the proposed amount of the penalty notice. The controller then has an opportunity to make its case to the Commissioner and put forward a legal or factual case which:- (a) argues that no penalty notice should or can be given; (b) challenges proposed findings in fact contained within the notice of intent; and/or (c) challenge the proposed amount.

When the commissioner issues a notice of intent, she (and her office) must continue to have an open mind. It is not simply a tick-box exercise; it is an important part of a formal legal process. The Commissioner must be open to being persuaded by the controller that she is wrong in any of the matters set out in the notice of intent; including, being persuaded that the legal tests for issuing a penalty notice has not been met.

A notice of intent is certainly not (or shouldn’t be) a guarantee that a penalty notice will follow, or that it will be in the amount specified in the notice of intent. It is no more than a formal document giving notice to a controller of the Commissioner’s intentions and forms part of the legal process for issuing an administrative fine.

Once a notice of intent has been served by the Commissioner, she is normally required to issue the penalty notice within 6 months (paragraph 2(2) of Schedule 16); this includes the time permitted for written, and where applicable, oral representations. However, this period can be extended where the Commissioner and the controller agree (paragraph 2(3) of Schedule 16)

Appeals
Unlike a notice of intent, a penalty notice is subject of a right of appeal to the First-Tier Tribunal. In such an appeal all of the relevant factual and legal matters are reconsidered by the Tribunal. The Tribunal is empowered to uphold the penalty notice, modify the penalty notice or quash the penalty notice. Thereafter, there are appeals (but not as of right, only with permission) to the Upper Tribunal and the courts on points of law. Failures within the notice of intent procedure would give rise to grounds of appeal in respect the penalty notice. Depending upon the nature of the defects they could ultimately lead to the Tribunal quashing the Penalty Notice.

“One Stop Shop”
One final thing of note is that the Information Commissioner is acting as the “lead supervisory authority” in the British Airways matter; this is a mechanism which exists in the General Data Protection Regulation and applies so long as the United Kingdom remains a member of the European Union. Other supervisory authorities from elsewhere in the EU will also have the opportunity to comment on the Commissioner’s enforcement action in this case. This is an important aspect to note in relation to all enforcement action, not just penalty notices. Before taking a final decision in the British Airways case the Information Commissioner will have to circulate a draft of her decision to those other supervisory authorities, who are then permitted to make comments; the Commissioner must take these comments into account. This mechanism applies where there is cross-border processing taking place (see Article 4(23) of the General Data Protection Regulation for a definition of “cross-border processing”), which was the case in repsect of the British Airways data breach.

Alistair Sloan

We are able to assist data subjects, controllers and processors with data protection law matters, as well as a range of other information law concerns. If you would like to speak to us about an information law matter, then please contact our team on 0141 229 0880 or by E-mail.