Unlawful Direct Marketing | Directors and managers now exposed to personal financial liability
From 17th December, officers of companies which engage in unlawful direct marketing risk being fined up to £500,000. These civil monetary penalties (as they are called) can be imposed by the Information Commissioner (ICO) and mark another step in the Government’s crackdown on rogue direct marketing businesses.
The Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426) (“PECR”) is one of the key pieces of legislation regulating the activities of direct marketers. Since their introduction 15 years ago, these Regulations have been amended on a number of occassions. Recent amendments have required marketers to provide calling line identification when making outbound calls and have prohibited unsolicited live calls about claims management services.
This most recent amendment which is due to come into force later this month is designed to close a loophole in the current law. At the moment, penalties can only be levied on companies which breach PECR. In many cases, when faced with such a fine the companies are simply dissolved with their business continuing in a newly formed “phoenix” company. The directors of these companies are not presently liable for the fine. The ICO estimates that over £2.5 million of fines have been avoided in this way in the last three and a half years.
This latest amendment to PECR will make officers of a company personally liable where they have consented to or connived in a breach by the company of PECR or where a breach is attributable to their neglect. It is worth noting that it is not only directors of companies who may be fined; managers, company secretaries and anyone purporting to be such a person are also at risk. This is going to allow the ICO to pursue the individuals responsible for their companies’ breaches long after the companies themselves have ceased to exist.
There are steps that all reputable direct marketing businesses should be taking now to ensure that their officers are not exposed to these potentially significant financial penalties. If you would like advice on this, please get in touch with our commercial law team who will be happy to assist you.
The Privacy and Electronic Communications (Amendment) Regulations 2018 (SI 2018/1189) will come into force on 17th December 2018.
Posted on 5 December, 2018 by Ortolan