Lawyer Christian Mancier, an expert in data protection compliance at Gorvins solicitors, has warned that changes in the cold calling laws introduced in mid December, could leave many company directors liable to huge fines.
When many firms were ‘winding down’ some company directors may be unaware of changes to the law relating to direct marketing changed on the 17th December 2018, a situation which could leave them personally liable for fines of up to £500,000 should their organisation breach certain rules on direct marketing.
The law relating to direct marketing changed on the 17th December 2018, just before many companies closed for their two week break.
Christian (left), a partner in the corporate/commercial department at Gorvins Solicitors:
“With the distraction of the festive season and then the closure of many offices over the Christmas break, it`s possible ensuring systems and procedures were in place to meet regulations has been overlooked. Which could now cost individuals very dear.”
The new rules amend existing rules on direct marketing as set out in the Privacy and Electronic (EC Directive) Regulations 2003, commonly referred to as “PECR”. They now make it possible to hold company officers (directors, company secretaries etc) personally liable for nuisance calls made by their companies . Previously companies alone could be fined while the people directing them remained untouched.
The change has come about as a result of the Information Commissioner’s Office (ICO) struggling to enforce fines against limited companies who were undertaking large volumes of so called “nuisance calls” in breach of the existing legislation.
“These companies were often simply liquidated or dissolved by their shareholders as a way of avoiding having to pay the monetary penalties levied against them”, says Christian, who has been listed in the top five of The Family Business Influencers’ Global Power List.
“These businesses would then often re-emerge under a new company name and number controlled by exactly the same people and doing exactly what they were doing before.”
The change will now allow the ICO to hold individual directors to account where the company fails to pay the fine or is placed into liquidation and the breach of the provisions of PECR occurred with the consent or connivance of the director concerned or was attributable to that director’s neglect.
Nuisance calls have plagued millions for years with research revealing more than seven in 10 believe that they received unsolicited calls a month.
Communications watchdog OfCom estimates that British consumers were bombarded with 3.9 billion nuisance phone calls and texts last year.
In general, companies must not make marketing calls to any number listed on what`s known as the Telephone Preference Service (TPS) or Corporate TPS (CTPS), unless that person has specifically consented to the calls. You can also only make marketing calls in relation to pension schemes if you meet strict criteria. And, when making such call, you must allow your number to be displayed.
In May last year cold-calling firm Keurboom were fined a record £400,000 by ICO for making almost 100 million nuisances. The company called people, sometimes at night, to see if they were eligible for road-accident or PPI compensation.
It breached privacy laws by calling people without their consent.
The company has since gone into liquidation but the ICO said it was committed to recovering the fine.
Adds Christian Mancier:
“The Government wanted to send a strong message to directors to make sure their customers have agreed to be contacted and their companies are acting within the law. It said it would also mean that direct marketing laws “are treated more seriously at boardroom level” with this legislation “piercing the corporate veil” of protection a limited company usually affords its directors personally.
“However, because of the timing of the changes it`s very possible that many firms – or rather their company directors – will have been distracted from reviewing their cold calling practices because the country was on the countdown to Christmas.
“But if companies don`t want to face 2019 saddled with a huge debt – and the correlating impact on business, they must make sure they are appraised of how to conduct themselves when cold calling.”