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Directors could be made personally liable for nuisance calls

Company directors could be made personally liable for nuisance calls, leading to potential fines of up to £500,000, under plans announced by the UK government.31 May 2018

The Information Commissioner's Office (ICO) can currently only fine companies for breaches of the Privacy and Electronic Communications Regulations (PECR). It announced last week that it has only been able to recover just over half of the £17.8 million in fines for nuisance calls it has issued since 2010, due to companies going insolvent in order to avoid paying penalties.

The ICO said that changing the law would "increase the tools we have to protect the public".

"For too long a minority of company directors have escaped justice by liquidating their firms and opening up again under a different name," said digital minister Margot James. "We want to make sure the Information Commissioner has the powers she needs to hold rogue bosses to account and put an end to these unwanted calls."

UK consumers received around 3.9 billion unsolicited marketing phone calls and texts last year, according to telecoms regulator Ofcom. The ICO issued more than £1.9m worth of fines for nuisance marketing to 23 companies in 2016-17, following a change in the law which meant that it no longer had to prove that the breach "caused substantial damage or substantial distress".

PECR generally prohibits companies from transmitting or instigating the transmission of unsolicited electronic communications to consumers for the purposes of direct marketing unless the person receiving those communications has given prior consent for the messages to be sent or the sender can demonstrate an existing commercial relationship with recipients. The ICO can serve fines of up to £500,000 on companies that breach the rules.

The largest fine issued by the ICO for a breach of PECR to date is £400,000, against a company responsible for nearly 100 million automated nuisance calls over an 18 month period. Keurboom Communications was subsequently placed in liquidation, leaving the ICO to attempt to recover the fine from the liquidator and insolvency practitioners.

In its consultation, which closes on 21 August, the government has proposed to amend PECR to give the ICO the power to impose fines of up to £500,000 on individual directors. It would be up to the ICO to decide whether to fine just the company, just the director, or both. If the company has multiple directors, each could be liable for a fine.

The change would also allow the ICO to hold individual directors to account where the company fails to pay the fine or is placed into liquidation; and where the individual is no longer in a senior position, for example through resignation. The new penalties would operate alongside the Insolvency Service's director disqualification regime.

The government said that the proposals "would send a strong message to directors that if their business involves direct marketing activities, they need to be sure their customers have agreed to be contacted and their companies are acting within the law". Changes would also mean that direct marketing laws "are treated more seriously at boardroom level", it said.