Data protection – What is happening overseas and the implications for NZ?

This is article 2 in a three-part series on data protection and the implications for open banking:

EU General Data Protection Regulation

The General Data Protection Regulation of the European Union (GDPR) came into force on 25 May this year and is the biggest shake up to European data privacy laws in 20 years.

Critically, a business anywhere in the world (including New Zealand) will be subject to the GDPR where:

  • it processes or controls personal data of individuals residing in the Union; and
  • the processing activities are related to offering goods and services to, or monitoring the behaviour of, individuals in the Union.

Banks with operations, business or potential business within the Union should turn their minds to whether they fall within the ambit of GDPR.  It is important to undertake this analysis, as the compliance requirements and sanctions under GDPR are much more onerous than those that apply under the current Privacy Act (and even from the law that is proposed under the Bill).

There are a number of areas in which the GDPR deviates from New Zealand privacy law, and some of the most marked have implications for systems and processes used within the organisation.

In particular, and this may come with a price tag.  Banks will need to have necessary technology solutions to be able to comply with the following requirements:

  1. Mandatory breach notificationIn general terms the changes that are discussed above with respect to mandatory breach notification under the Bill would need to be accelerated for GDPR compliance.
  2. ConsentConsent under GDPR (for example to marketing or for profiling purposes) requires a clear affirmative act establishing a freely given, specific, informed and unambiguous indication of the individual’s authorisation.  Silence, pre-ticked boxes, or inactivity is not enough to constitute consent or deemed consent.  The systems that support existing consent gathering may need to be reconfigured, upgraded or replaced to cope with much more sophisticated consent gathering requirements.  Agencies will need to be able to produce evidence that consent has been obtained, and therefore the use of reliable systems are a must.
  3. The right to be forgottenSince personal data must be erased on request of the individual, unless there are compelling reasons, systems need to be capable of finding and erasing data.  Banks may also need to consider the extent to which and how this can be achieved in respect of back-up and archive data.  This may be burdensome where data is held in disparate systems.  It may be that some but not all data about an individual will need to be erased, which means further complexity.
  4. Data portabilityThis means that on request an individual is entitled to receive a copy of all personal data held about them in a structured, commonly used and machine-readable format.  Similar to the right to be forgotten requirement, systems need to be capable of finding and gathering all of the relevant data and (in what is possibly the more complex task, at least as an initial exercise) mapping and structuring that data for use elsewhere.

In terms of processes, the “privacy by design” requirement of GDPR requires an agency to implement measures to show that they have considered and integrated data protection into their processing activities.  Whilst this may not be a legal requirement for New Zealand agencies unaffected by GDPR (even under the proposals in the Bill), “privacy by design” is just an example of good planning and it is likely that banks will be doing this in any case.

Similarly, where, for example, a bank wishes to leverage personal data for a novel purpose or commercialise it in some way by providing it to a third party, it will be necessary for the bank to undertake a privacy impact assessment (PIA), at least in certain higher risk situations.   Taking the opportunity to undertake a PIA is a useful exercise, particularly when it comes to considering whether data that appears anonymous could actually be lead to the re-identification of the individual once it is combined with other data collected from elsewhere.  Again, undertaking a PIA reflects best practice and banks should be familiar with this.

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This is article 2 in a three-part series on data protection and the implications for open banking:

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Richard Wells

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As well as his technology practice, with a background in commercial and IP law, Richard is recognised as a leading Sports and Events lawyer ranked as Band 1 by international research directory Chambers Asia Pacific. He has broad experience working with event hosts, sponsors and stakeholders to deal with issues arising in relation to major events in New Zealand.

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To compliment his “black-letter” law expertise developed in private practice in NZ and the UK, Tom is able to draw on deep commercial acumen following significant in-house experience at Spark NZ (where he was Assistant General Counsel) and at Telefonica O2 in the UK and Ireland.

Tom has been ranked by Chambers & Partners as a leading TMT lawyer since 2013 where sources say “He is a very good communicator, able to articulate what can be a complex concept in a way that is easily understood by various parties.”  The Asia Pacific Legal 500 ranks him a leading individual in TMT, where sources describe Tom as “very client-focused, passionate and proactive.”

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Jeremy also spent several years working in offshore funds for a major offshore law firm, and is admitted to the bar in both Guernsey and the Cayman Islands.

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Jennifer has extensive experience as a commercial litigator. She has represented commercial and government clients on a number of large complex disputes in the Federal and Supreme Courts in Australia, the Australian Competition Tribunal and the High Court and Court of Appeal in New Zealand. Jennifer has particular expertise acting on competition enforcement actions, consumer law actions, actions for breaches of directors duties, contractual disputes and negligence actions.

Jennifer has advised clients in the technology and telecommunications, insurance, gambling, airline, accommodation, FMCG, grocery, pharmaceuticals and energy industries on a range of commercial issues. This includes advising clients on the implications of commercial terms such as warranties and indemnities, termination rights, restraints of trade and confidentiality, compliance with the Commerce Act, Fair Trading Act and Companies Act and product liability issues.

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June recently returned to New Zealand, having practiced at a magic circle firm in London for several years, and at another top tier New Zealand law firm prior to that. During her time in London, June regularly advised leading private equity houses and FTSE100 companies on employment law and regulatory issues.

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