Data Protection in EU Financial Services. ECRI Research Report No. 6, 1 April 2004

Sousa de Jesus, Alfedo. (2004) Data Protection in EU Financial Services. ECRI Research Report No. 6, 1 April 2004. UNSPECIFIED.

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Abstract

[From the Introduction] Individual privacy has always been a source of concern for common citizens, but mainly from the perspective of human rights and civil liberties. Nowadays, the internet has focused attention once again on the issue of data protection. The major barrier to full development of the internet and e-commerce precisely remains consumers’ reluctance to provide private and confidential information. With globalisation of the economy and the IT revolution, the banking industry is going through an evolutionary process, readapting the relationship with clients through new products and new means of delivery. In order to reap all the benefits from these new potentialities, however, financial services should not undermine the privacy issue. National legislation on data protection is often out-of-date, ineffective and unenforceable owing to jurisdictional limitations, whereas at international level, a multiplicity of initiatives has led to a situation that is plagued by inconsistencies. Nevertheless, international instruments serve as an example for other national and EU legislation. As an alternative to the legislative approach, selfregulation, i.e. a code of conduct, appears particularly well suited to the issue of data protection in the context of the internet. In 1995 and 1997, the EU adopted the directives on data protection based on a careful balance of interests between consumer protection and completion of the Internal Market through the free movement of information. This legislative framework provides a reasonable level of security within the EU area. Consumer confidence is reinforced through rights and obligations controlled by supervision authorities. Nevertheless, the system for international transfer of data outside EU territory appears impracticable and not easily enforceable. International movements are restricted to third countries providing an adequate level of protection, which represents a complex and incommensurate verification procedure. As far as the transfer of data to the US is concerned, the existing agreement provides an adequate level of protection but does not cover financial services. Therefore, the EU directive does not provide full protection all over the world, but simply grants people covered by its scope with a guarantee of an adequate level of protection for transfers.

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