If it is to become law the amendment will need to be approved by MPs in the House of Commons. The Government opposed the amendment but was defeated by 134 votes to 130.
The amendment would make it a criminal offence to "intentionally or recklessly disclose information contained in personal data to another person, repeatedly and negligently allow information to be contained in personal data to be disclosed, or intentionally or recklessly fail to comply with [their] duties".
"Data controllers currently do not face anything like adequate sanctions if they intentionally or recklessly disclose information, or indeed are repeatedly negligent," said Liberal Democrat peer Baroness Miller of Chilthorne Domer, introducing the amendment.
"Goodness knows, this is not exactly a new issue. The Government have had time to address it. In 2002 in another place [the House of Commons] my honourable friend Paul Burstow revealed that a total of 1,354 government-owned computers had gone missing over the previous five years, while much more recently, as noble Lords will be aware, vast amounts of data, whether from Her Majesty’s Revenue and Customs or the health sector, have been lost," she said.
"The issue has been around for a long time, and not only in government sectors. The private sector, as we know, can be negligent, and it can do all sorts of things with data that it should not do. Both the public and private sectors need to be covered by further sanctions, which is the reason for our amendment," said Miller.
Until recently The Bill contained a clause that would introduce jail sentences of up to two years for people who steal or sell personal data, but the Government has decided not to activate that clause of the law.
The new amendment would create a new offence, but Government minister Lord Hunt of Kings Heath opposed the change, saying that the Government wanted to wait until it had reviewed past problems with data loss before legislating.
"The Government are involved in a number of reviews on these matters in the light of some of the well publicised incidents that have taken place," he said. "Just as noble Lords usually say that the legislation I bring forward is premature and has not had enough consideration, I have to say that that is our position at the moment."
"The Government recognise the genuine and legitimate concerns expressed by noble Lords both in this debate and in Committee, but a number of imminent reviews and reports will inform both the actions that the Government have to take as a Government and whether legislative changes should be made. That is why we think it would be premature to legislate at this point," he said.
Miller said that the public could not afford a wait. "Basically the public will have to continue with this lack of protection for at least another year or two, during which time, at the rate of the past 12 months, millions more pieces of data will have gone missing," she said.
The Conservative Party proposed a weaker amendment which would only apply to public bodies or workers on contract to the public sector, but Miller said that it was a false distinction. "Citizens do not mind who lost the data; it is irrelevant to them. What is important is that it is their data that have been sold, lost or left on rubbish heaps and it is they who are affected by it," she said.
The Information Commissioner Richard Thomas has previously called for a law that would punish people or organisations that put other people's personal data at risk. In January the Parliamentary Justice Committee backed Thomas's calls for such a law.