Emma Ann Hughes  

Data could come back to Byte you

Emma Ann Hughes

Emma Ann Hughes

Up until now, the greatest cause of concern for many advisers when they were contacted by the Financial Ombudsman Service would be gaps in the information they held about their clients.

As many ombudsman decisions prove, if you haven't got the full facts about a client from the time you made a recommendation it can be near impossible to prove you were in the right when they complain many years later.

But with the data protection rules set to come into force this year, and the remarks made by the Financial Ombudsman Service, it is clear advisers now have something new to fear.

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Because from later this year you can clearly hold too much data about a client, use it in a way they don't believe they permitted you to do so and find yourself faced with a demand to erase that information or even a claim for compensation.

New General Data Protection Regulation rules come into effect on 25 May and require advice firms to have a high-level policy regarding when data should be kept and destroyed in response to the right to erasure requirement. 

Most financial advisers deal with an enormous amount of data and details relating to their clients’ financial activities and personal circumstances.

As this information is often going to be sensitive – perhaps about inheritance or planning for a divorce – it is understandable that some people may be extremely worried at the prospect of it being passed on without their knowledge or agreement.

The Financial Ombudsman Service is right to predict this is the source of the next big surge in complaints.

Who hasn’t complained about some of the rubbish “offers” that land in my email inbox, text messages pinging to notify you about promotions you couldn’t care less about and cold calls trying to push you to purchase assistance for your computer?

It is enough to make you nostalgic for an era when all you had to moan about was the amount of junk mail landing on your doormat and the fact there was no option to fast forward through commercial breaks.

Advisers and providers would be wise to listen and act now to stop a barrage of complaints about the way they use their clients’ data.

Annette Lovell, director of engagement at the Financial Ombudsman Service, said: "We were talking recently about the increasing tension that there is between the desire to provide ever more products to individual consumers and the need to ensure that consumers' privacy and data is protected.

"You can see there is a potential tension there and if those things aren't managed well by financial businesses that is a potential area of concern. That is something we would want to keep an eye on."

As well as talking to a client about their circumstances, advisers should be talking to them about what they are happy to be contacted about in the future too.