Directors’ personal liability for nuisance communications
Cathrine Ripley considers the new powers of the Information Commissioner’s Office (ICO) to impose fines on company directors of up to £500,000 if their company breaches the rules on unsolicited marketing communications.
The Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR) governs the marketing communications UK consumers receive, including phone calls, text messages and emails.
PECR provides that companies may only send direct marketing communications to consumers if the consumer has given express prior consent or the sender can demonstrate an existing commercial relationship with the recipient.
In 2015 the ICO was given powers to fine companies up to £500,000 for breaching the rules on unsolicited marketing communications. However, a large proportion of these fines were never paid, often because the offending company would be wound up to avoid paying the fine and the directors would then set up a new (“phoenix”) company to resume trading.
To address this, the ICO has been given the power to impose fines on the directors personally. The new rules came in on 1 December 2018 and the maximum fine which can be imposed on a director is £500,000. This recognises that breaches of PECR can occur with the consent of the company’s directors, or because of their neglect.
Moving forward, the ICO is due to issue a code of practice on direct marketing, and the government has lowered the threshold requirements the ICO must satisfy before taking action. For instance, the ICO will no longer have to show that the nuisance communications caused substantial damage or distress to consumers.
Although PECR has been in place for 15 years, nuisance marketing communications can still be a problem. Although some concerns were raised during the consultation period that the changes will not go far enough to stop cold calling, spoofing and the use of phoenix companies, the new powers should help to deter companies from breaching PECR and give consumers more control over the marketing communications they receive.
Applying the rules about marketing communications is not always straight forward so if you are unsure whether your practices might inadvertently fall foul of PECR, it is best to seek professional advice.