SMEs warned over cost of data protection hacking

Published on

Law firm Moore Blatch has warned that SMEs could suffer disproportionately due to a malicious data protection leak.

The firm recently carried out research amongst SMEs which shows that 76% of the companies surveyed are concerned about cyber-security, with 17% having experienced a cyber-attack.

However, Moore Blatch believes the issue for SMEs could be far worse financially due to the often more personal relationship that they have with their customers and the less utility-based products and services they provide, compared to larger businesses.

The key issue is that, while hackers are most interested in financial information, new legislation allows a customer to seek financial recompense for the distress caused by the loss of all their data, which for many people might mean that the financial data loss could be a secondary issue compared to their purchasing behaviour. The legislation follows the recent Google Inc. v Vidal-Hall case where it is was agreed that claims can now also be made for emotional distress caused by a breach of the Data Protection Act 1998, even though no financial loss has been suffered.

For example, whilst a gas company may hold the same financial details as an SME, the loss of the product details, i.e. that you are a gas user, is unlikely to cause distress. An insurance broker, on the other hand, might lose details of one’s classic car or fine art collection with the same principle applying across many business types.

Financial loss because of reputational damage, and loss of trust are also likely to hit SMEs harder as, for many, this is one of their key trading propositions, the firm warned.

Paul Whitaker, partner at Moore Blatch, said: “The most commonly discussed financial cost relating to a cyber-attack and loss of data is the potential fine from the Information Office Commissioner. But, while this should not be ignored, the real financial issues for many SMEs lie elsewhere, as the loss of the client’s relationship and details about products and services lost could cause far greater emotional stress. Therefore, if an SME is hacked or loses client data, the claim for emotional distress could be far higher.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

TPFG financial services revenue rises to £13m

The Property Franchise Group (TPFG) increased financial services revenue by 10% to £13m during...

Finance confidence improves despite economic gloom

Confidence across the finance and leasing industry improved during the second quarter despite most...

Market Harborough appoints deputy finance chief

Market Harborough Building Society has appointed Brad Nicholls as Deputy Chief Finance Officer as...

The Melton joins Mortgage Broker Tools affordability platform

Melton Building Society has joined the Mortgage Broker Tools panel, giving advisers access to...

Knowledge Bank technology underpins top three broker criteria platforms

Knowledge Bank’s technology powers all three of the highest-rated criteria sourcing services in the...

Latest publication

Other news

TPFG financial services revenue rises to £13m

The Property Franchise Group (TPFG) increased financial services revenue by 10% to £13m during...

Finance confidence improves despite economic gloom

Confidence across the finance and leasing industry improved during the second quarter despite most...

Market Harborough appoints deputy finance chief

Market Harborough Building Society has appointed Brad Nicholls as Deputy Chief Finance Officer as...