Evan Schuman's StorefrontBacktalk

Alarmed about an “unacceptable” level of data loss and theft during the past year, the British Government is proposing fines of as much as 500,000 pounds (about US$841,000) for retailers that commit “serious breaches” of the nation’s data protection regulations.

“This reflects the importance that government places on safeguarding personal data effectively and processing it responsibly and lawfully,” said the U.K. Ministry of Justice. “Increasing the sanctions faced by data controllers through financial penalties should contribute to increased compliance with the data protection principles and greater confidence for data subjects that their information is being handled correctly.”

Nevertheless, the government is directing the agency that will levy the fines, the Information Commissioner’s Office (ICO), to “exercise its discretion to assess the appropriate level of any penalty it imposes. We must ensure that any financial sanction that may be imposed by the ICO is proportionate.” This discretion gives the ICO “flexibility to deal effectively with a wide range of data controllers with varying financial resources” and instructs the office to “have regard to the financial hardship a penalty may inflict on a data controller guilty of a serious breach of the data protection principles.”

The goal with this language is to ensure that small companies aren’t fined out of existence. Although the Ministry of Justice is urging a maximum penalty, it said that it believes any penalty imposed by the ICO should not exceed 10 percent of “the highest annual turnover of a small company.”

The penalty recommendation was made after the ICO reported that the number of U.K. data breaches involving the loss of personal information rose to an “unacceptable” level in the past 12 months, with 434 organizations reporting breaches–up from 277 the year before. Deputy Information Commissioner David Smith was quoted in British news reports as saying that most organizations do a decent job, “but regrettably a significant minority of management teams are failing to take data protection seriously enough.” Smith said “unacceptable amounts of data are being stolen, lost in transit or mislaid by staff. Far too much personal data is still being unnecessarily downloaded from secure servers on to unencrypted laptops, USB sticks and other portable media.”