What does Brexit mean for the Data Protection Act?

bWhat does Brexit mean for the Data Protection Act?

Brexit was a word conjured up by combining “British” and “exit”, referring to the possible British exit from the European Union. Everyone knows that. 

But how many people could have imagined that “Brexit” would go from being a reasonably clever play on words to being the single most significant political event in the United Kingdom’s recent history? Not many, probably. 

Brexit no longer was a word, it is a word.

Before the referendum, which took place on Thursday, June 24, most people might have predicted that the Brexiteers would get maybe 20 to 30 per cent of the vote, and be happy that they had made their point to the rest of the population.

Some might have predicted that Brexit would get 30 to 40 per cent, or maybe even more. But nobody — not even Nigel Farage, leader of UK Independence Party and de facto leader of the Brexit movement for decades — predicted an outright win for the Brexiteers.

So now that it’s happened, and the Brexit campaign has won, no one seems to know what to do or say. Reactions range from shocked silence to automated cliches, although there has actually been less of the latter than one might have expected, possibly because the full implications of the nation’s decision are too enormous to be fully comprehended in a few days, let alone articulated.

Even if the UK does as the EU suggests and formally files for a divorce by invoking article 50 or whatever is required, a colossal amount of work has to be done to see Brexit through to completion. And very few people know what the future holds.

However, there are companies and experts who have helpfully put forward their own views. 

Many positives

Daniel Reilly, co-founder at Ruler Analytics, a marketing analytics and call tracking solution provider, says: “Here at Ruler Analytics we are disappointed in the vote to leave the EU. However, the digital marketing sector is one of the most resilient and growing sectors of recent times. Whilst there are a number of negatives to leaving the EU there are also many positives for an industry that has no borders.

“We certainly don’t think this change will affect the ability to recruit skilled labour from abroad, nor do we believe this will cause a shortage of jobs within a constantly developing and evolving marketplace. We are a serviced-based financial economy, which is driven by a great infrastructure of both education and training, and this has allowed us to be at the forefront of digital, and will continue to do so for many years to come.” 

‘No change’ on data protection

Law firm Simmons & Simmons has issued a joint statement with Henley Business School, University of Reading, on the subject of data protection.

They say the Data Protection Act of 1998 will not be scrapped as a result of Brexit, as some might imagine, but may be reformed. 

Alexander Brown, partner at Simmons & Simmons, says: “While there was stiff opposition to many measures contained in the EU General Data Protection Regulation during the negotiations with the UK Government, it’s highly unlikely that the Data Protection Act 1998 will remain in place without some form of reform.” 

He adds: “The really interesting question – as yet to be decided – is whether the European Commission will recognise the UK as an ‘adequate country’ for the purposes of cross-border personal data transfers or whether the UK could suffer the same fate as the US where transfers of data have been made more problematic through the scrapping of the US Safe Harbor.” 

According to some experts, the most likely outcome is that the EU will make a determination in favour of the UK as an “adequate country” given it has been at the forefront of providing legal protection for consumers with respect to personal data for over three decades. The UK was one of the first countries in the world to empower its Data Protection Authority to impose fines for personal data breaches. 

There are also other significant business continuity challenges ahead for the financial services sector, warns Bryan Foss visiting lecturer at Henley Business School. 

Foss says: “Since the stock market blip in 2008, FS [financial services] firms have seen record fines and profit impairments as a direct result of poor identification of operational risks. Lack of training and preparing for personal data breaches is a significant internal training issue that many companies are still failing to implement and this is now key to effective risk and governance management where the personal data of millions of customers across the EU is being processed.”

Overwhelmingly supportive

Matt Hunt, CEO of Apadmi Enterprise, a UK-based app developer, says the international business community has been generally supportive. 

Hunt says: “The UK and EU are markets that have continued to offer tech businesses huge growth potential and the international business community has been overwhelmingly supportive of our industry. 

“Technology does not observe boundaries and we have been lucky to enjoy an inspiring array of tech from the UK, Europe and even further afield, which we have been able to access and use for the benefit of our customers. 

“The UK tech industry has been in a strong position and the only limitations we’ve faced to do business has been our own ability. With the impending Brexit, there is now a high level of risk and uncertainty over our future and questions are being asked as to how will we be able to build on our success and further grow without the support of the EU.” 

The uncertainty principle

One of the cliched statements about business is that it does not like uncertainty. “Business doesn’t like uncertainty.”

The main reason for this is that business needs to know that the investments it is making will have enough time to pay off, and that takes a while, and requires stability.

In the current climate, there are lots of questions about Brexit and few answers. Which could create an atmosphere of uncertainty.

However, Britain has attracted large amounts of foreign investment over the years by creating a good investment climate, often irrespective of the EU. Meaning, the UK has attracted investment on its own merits. This may continue to happen.

But like with most questions about the future, nobody really knows what’s going to happen.