European Financial Privacy Of Peril - 1940 Words

European Financial Privacy in Peril By Bill Davies and Julia Morriss With a number of recent high profile court rulings and a major new Regulation in the works, data privacy has become a cause cà ©là ¨bre within the European Union (EU). The size and connectivity of the European market means that shifts in its regulatory framework ripple with major consequences for global business. The EU’s latest attempts to legislate in this area are a consequence of shortcomings in the design and implementation of the existing system of data collection, retention and safeguarding. While the existing system was designed to protect the private sphere from state intrusion, it ultimately created a system that punishes business. Background After World War†¦show more content†¦There remains a perceived tension between Europe’s commitments to the individual’s right to privacy and the growth of the digital economy, which is crucial for Europe’s future progress. The EU’s initial response to these concerns was issued in its Directive 95/46/EC, otherwise known as the 1995 Data Protection Directive. The legislation was framed dually as a move to protect individual privacy against government and corporate intrusion, whilst at the same time aiming to improve data flows across Europe. Conversely, the Directive’s implementation allowed for an erosion of privacy, particularly financial. States turned the Directive into a vehicle for their own purposes through exceptions and loopholes that relaxed their data use requirements relative to the private sector. Measures intended for the protection of privacy morphed into a lever against the private sector in tax compliance and foreign investment. Impact of Enforcement and Harmonization The 1995 Directive gave the EU institutions considerable power over the Member States. Every Member State was required to create a Data Protection Authority (DPA) to monitor compliance with data protection legislation. The DPAs enjoy extended access to a large part of business’ information, handle claims from customers or agencies, and initiate legal action against non-compliance. While this may increase consumer feelings of security relative to businesses, it comes at the cost of privacy relative to the