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ICO says FSCS law firm could have breached data rules on Keydata

The Information Commissioner’s Office says law firm Herbert Smith is likely to have breached data protection rules in disclosing the names of Keydata investors and the amount they have been paid in compensation.

Herbert Smith is acting on behalf of the Financial Services Compensation Scheme to pursue advisers that recommended Keydata products in a bid to recoup compensation paid out to Keydata investors.

In October, the law firm wrote to over 500 firms that sold Keydata products backed by Luxemburg-based vehicle SLS to start the legal process of recovering Keydata compensation. It began proceedings against advisers who sold Lifemark-backed Keydata products last month.

Alongside the letters sent to Keydata SLS advisers, Herbert Smith sent out a claim form and details of affected clients and how much compensation they were paid. It included details of all other firms that sold Keydata SLS products, including client names and compensation amounts.

An adviser who recommended SLS products, who wants to remain anonymous, complained to the ICO about the level of information disclosed.

The response from the ICO, sent last month and seen by Money Marketing, states: “We have already decided it is unlikely that Herbert Smith has complied with requirements of the Data Protection Act because they should not have disclosed the information. We believe steps could and should have been taken to remove the client information which was not applicable to that specific organisation before it was sent out.”

The ICO has decided not to take the matter further as it says Herbert Smith has taken remedial action. Herbert Smith, the ICO and the FSCS declined to comment on the data protection breaches.

Financial Escape director Phil Castle, who is facing a liability over Keydata Lifemark claims, says: “The mistakes in the handling of the Keydata debacle appear to be continuing. Herbert Smith has got away with a slap on the wrist.”

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There is one comment at the moment, we would love to hear your opinion too.

  1. Julian Stevens 17th May 2012 at 12:49 pm

    Phone call from someone at the ICO to his oppo at the FSCS:-

    Hello John, Peter here from the ICO.

    Oh yes, what can I do for you?

    Well, it’s come to our attention that Herbert Smith has committed a fairly serious breach of the DPA. We’ve approached them about it, explained that what they appear to have done is a potentially fineable offence, but they’ve said they’re working for the FSCS and referred us to you.

    Ah, yes, they are working for us.

    So what about the fine that should normally be levied for this breach of the DPA?

    Well, I think in this case the best thing to do is just issue a reprimand, get them to undertake not to do it again and that’ll be the end of it.

    Yes, but surely there’ll be an outcry from everyone else who’d normally be fined for a similar breach?

    Probably, but there’s nothing they can do about it, so don’t worry. After all the ICO does have discretion in such matters, does it not?

    I suppose so, but some might say that if we let off Herbert Smith for this breach but then next month fine somebody else for exactly the same sort of breach, we’ll be applying our enforcement powers selectively.

    Of course, Peter ~ that’s how regulation works. Anything else?

    Uh, no I suppose not. Nice talking to you.

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