Tuesday, November 20, 2012

‘Public relations disaster’ & £150K costs loom for Scottish Borders Council over appeal of ICO £250K data breach fine

sbclogoScottish Borders Council face defeat & significant costs over their appeal against £250K ICO fine Scottish Borders Council, the regularly mired-in-scandal South of Scotland local authority which recently hit the headlines over its secretive treatment of a huge payout of £318,000 to former Chief Executive David Hume may be about to suffer another mishap, as it appears the Council is now about to lose its appeal against a £250,000 fine imposed by the Information Commissioner even though SBC had already agreed to pay £200,000 to the ICO in a ‘discounted fine’ for its breach of the Data Protection Act. The Council will also face costs of up to £150K whether it wins or loses the appeal to the ICO over the fine.

According to a report about the fine imposed on Scottish Borders Council by the ICO on Outlaw.com, an Information Rights Tribunal is to rule on whether organisations can pay a discounted fine for breaching UK data protection laws and still keep the right to appeal against the penalty.

However, in a statement reported on the Outlaw.com website, the Information Commissioner’s Office (ICO) has said that the fact the Council has paid the discounted penalty means the body has lost its right to appeal.

“The Commissioner operates an early payment scheme for all civil monetary penalties served,” an ICO spokesperson said in a statement. “Under that scheme, a data controller who has been subject to a penalty may obtain a 20% discount if the Commissioner receives the full payment of the penalty within 28 calendar days of the notice being served.”

“The objectives of the early payment scheme are to encourage early payment of the penalties and reduce the costs to the public purse entailed on pursuing enforcement action and responding to challenges to the notices. The scheme operated by the Commissioner is similar to that operated by other regulators, such as the Financial Services Authority,” the spokesperson added. “There is no provision under the scheme which allows a data controller to make a payment subject to reservations, for example, by reserving his right to appeal against the penalty. The effect of such reservations would be to nullify the advantages which the scheme is intended to achieve.”

Yet, an earlier Press Release from Scottish Borders Council, dated 22 October 2012 : Council appeals data breach penalty, reprinted below, claimed the discounted fine was only paid “with the caveat that SBC still reserved the right to appeal.”

Scottish Borders Council has launched an appeal over the size of a penalty from the Information Commissioner's Office (ICO) after a self-reported data breach. The ICO issued a £250,000 fine to SBC last month after files relating to the Council were discovered in a recycling bank.

The fine has been paid in order to achieve a 20% discount on the total amount but this was done so with the caveat that SBC still reserved the right to appeal. The appeal has been lodged in a written submission to the Information Tribunal.

The ICO has until 2 November to file a reply to the appeal. The case will then go to a three-judge panel for a decision, which is expected by the end of January.

Legal insiders have told Scottish Law Reporter “there is little legal basis for the claims made in the Council’s October Press Release”, and expect the local authority to lose its appeal.

Hawktalk, the blog of Amberhawk Training Ltd, has featured an in depth report on the ICO’s £250K fine of Scottish Borders Council,and sets out in some detail the costs of losses facing SBC if it loses its appeal. It is claimed there could be a public relations disaster for the Council if it’s appeal to the Information Rights Tribunal goes wrong.

Hawktalk reports that the Information Rights Tribunal could reinstate the full amount of the fine imposed by the ICO on the council which would result in SBC losing a further £50,000 and would also have to bear the costs of its appeal, thought to be around £80,000 to £100,000 and that even if the Council won its appeal, it would still have to bear its own costs.

Scottish Law Reporter featured a report on the £250K fine of Scottish Borders Council in an earlier article, HERE which also featured claims from Council insiders of “widespread abuse of data protection legislation within the council”.

No one from Scottish Borders Council was available for comment.

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