UK SMEs 'do not understand new EU data protection laws well enough'

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A new report has indicated that British small to medium-sized enterprises (SMEs) are poorly educated about the impact of the EU's new data protection legislation, known as the General Data Protection Regulation (GDPR).

Adopted in April 2016 and set to be implemented in two years, the laws are designed to give consumers greater control over their personal data, including the right to be forgotten. It replaces the Data Protection Directive of 1995, which has become outdated in the era of cloud computing, big data and social networks.

It will affect all companies operating in the EU, but Close Brothers' quarterly survey of UK SME owners and senior management has indicated that only four per cent of SMEs say they fully understand the legislation and are clear about the effect it will have on their business.

By contrast 82 per cent have either never heard of GDPR or do not understand what its impact will be, while a further 14 per cent say they will need to take further advice to get up to speed.

This is despite the fact that this is one of the most significant pieces of data protection legislation to be introduced by the EU in many years - and despite the potentially substantial financial penalties that may result if companies fail to comply.

Ian McVicar, managing director at Close Brothers Technology Services, said: "What these results demonstrate is that there is a clear lack of understanding at all levels and across all sectors. One of the headline figures that has been focused on is the penalty for non-compliance, which is up to four percent of annual revenue or €20 million (£15.47 million), whichever is the higher.

"We would like businesses to think positively about GDPR and understand how it can benefit both them and their customers."