Bankers warn that the planned law, which includes the “right to be forgotten” rule could make it harder for banks to detect fraud, automatically grant loans, and hurt online services.
The draft regulations could result in fines of as much as 5 per cent of global turnover for those who breach the new rules. The European parliament and national governments, which in June agreed the plans that have been recast as the “right to erasure” by EU lawmakers, are pushing to strike a deal by the end of the year.
BEUC, an association that represents national consumer rights groups in the EU, said banks should be more transparent and “curb their appetite for data”, adding that the rules would still let them share information “when there is a legitimate interest for internal administrative purposes”.
Bankers say one of the main concerns is having to get customers’ consent to use their data for purposes beneficial to the bank, a change from the status quo where lenders are allowed to apply a “balance of interest” test on how customer data are used.
This claim is challenged by the European Commission, which says that banks will still be able to collect and process the necessary data to comply with other legal obligations, such as measures to tackle money-laundering.
Another potential problem for banks is whether they have the mechanisms in place to delete requested customer data.
The new legislation “will greatly simplify the regulatory environment for banks in the union since one single data protection law will apply across Europe”, said the Commission.
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