Financial advisers, dealer groups and fund managers need to start checking the manner in which they hold client data to ensure they are compliant with new Privacy Act requirements which come into effect from March next year.
That is the assessment of the insurance advisory business SMART Business, with its managing director Oscar Martinis warning that the changes to the Privacy Act carry significant new penalties for data breaches.
He suggested advisers, dealer groups and fund managers would need to review their policies and procedures in circumstances where the legislative changes carried data-breach fines of $1.7 million for companies or $340,000 for individuals. Martinis also suggested that those exposed to the legislation should consider taking out Cyber Insurance.
"The Privacy Commissioner has stated that he will not shy away from accepting enforceable undertakings and seeking civil penalties in the appropriate cases," Martinis said.
Outlining the potential cost impacts, Martinis cited the Ponemon Institute's 2013 Cost of Data Breach Study which suggested the average cost of a data breach for Australian companies in 2012 was $3,981,784.
The study also pointed out that the cost to reinstate each record breached in Australia was on average $133, but that it was $215 per record for financial institutions.
"This represents a significant business risk for all financial services participants, and when you factor in the new fines and penalties that can be levied by the Privacy Commissioner, then cyber risk is one business risk that cannot be ignored," he said.
