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Privacy legislation to hit small businesses

BUSINESSES may face another big compliance burden when new privacy legislation takes effect on December 21.

While small businesses with turnovers of less than $3 million are exempted from the legislation, unless they are solely in the business of collecting and selling information, it still looms as a problem for the sector.

Possibly the biggest problem facing businesses is the requirement for them to give people the ability to access and correct information a company holds on them.

This threatens to create an administrative headache for many companies.

Also, under the new privacy laws, companies will not be allowed to disclose information on people without their permission.

This could mean a company with inadequate computer security systems could find itself breaking the law.

There are 10 privacy principles contained in new law – collection, use and disclosure, data quality, data security, openness, access and correction, identifiers, anonymity, transborder data flows and sensitive information.

Accounting firm McKessar Tiele-man partner Brenton Siviour said the new laws threatened to bring busi-nesses a massive overhead on top of the GST.

“This could be the straw that breaks the camel’s back for a lot of companies,” Mr Siviour said.

“There are still a substantial number of businesses with turnovers of between $3 million and $20 million that are running on very slim margins.”

Mr Siviour said the legislation also could raise small businesses’ mar-keting costs.

“A lot of small businesses share information in loose alliances and joint ventures for marketing purposes,” he said.

Thinking Internet Management managing director Mark Bergin said the new legislation would mean the costs facing owners of information would increase.

“One of the principles is allowing people to gain access to information on them, something a lot of companies can’t do,” he said.

“Information is now becoming a significant liability rather than an asset.”

Mr Bergin said that, besides the potential for legal action for breaches of the new privacy laws, there also was the potential for loss of trust.

“Keeping a customer’s trust is a perennial problem,” he said.

“Without that trust it is hard to make money.”

Law firm Freehills special counsel Gayle Hill said the legislation would cause businesses to review how they handled personal information.

“Those hardest hit will be those that have heavily information technology-based systems. They could face system changes,” Ms Hill said.

“All of their information flows will need to be tracked.

“But for small business it will not be so much of a problem.”

Law firm Minter Ellison corporate and commercial practice group head John Poulsen said even the issue of gaining a person’s consent to use their information had been targeted.

In many cases, agreement to consent was buried away in the fine print covering terms of trade, he said.

Now the consent issue had to be brought to the customer’s attention.

“Businesses will have to start setting up privacy compliance systems,” Mr Poulsen said.

Both Freehills and Minter Ellison have packages available to help businesses deal with the new privacy legislation.

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