GDPR could be the target of UK’s post-Brexit ‘red tape’ cutting

An independent report into post-Brexit UK regulation, commissioned by the country's Prime Minister, has recommended replacing the General Data Protection Regulation (GDPR) and reforming insurance rules as part of a new proportionate risk-based and growth-orientated approach. The independent Taskforce on Innovation, Growth and Regulatory Reform said Brexit offered a “one-off opportunity to set out a bold new UK regulatory framework based on a set of principles embedded in UK common law, which prioritises innovation, growth and inward investment”. The taskforce was led by former Conservative party leader and Brexit campaigner Iain Duncan Smith. The report recommends removing “unnecessary regulatory burdens” and concentrating specific regulatory reforms to “unleash” growth in a range of high-growth sectors, as well as boosting productivity and stimulating innovation. The taskforce also proposed a new “proportionality principle” that would make regulation “proportionate to both the scale of the risk being mitigated and the capacity of the organisation being regulated”. “It is not just the code-based approach that had an insidious effect on the UK’s regulation. The way the ‘Precautionary Principle’ has been applied by the EU has meant some innovations have been stifled due to an excessive caution that is often disproportionate to the associated risk,” the taskforce says. “The UK needs to establish its own modern, agile and effective approach to regulation. The UK should adopt a new proportionality principle that reflects the risk and the desired outcome,” it adds. The report makes a wide range of proposals to cut ‘red tape’ across a number of sectors, including technology, agriculture, energy, healthcare and transport. Proposals include enabling wider commercial use of drones, accelerating clinical trials, trialling net-zero technologies, creating a smart energy grid, simplifying the regulation of chemicals and product labelling. The taskforce is, however, particularly critical of the GDPR, which it wants replaced by a new UK data protection law. The report says the GDPR “overwhelms people with consent requests and complexity”, while “unnecessarily restricting the use of data for worthwhile purposes”. “The GDPR is already out of date and needs to be revised for AI and growth sectors if we want to enable innovation in the UK,” it says. The taskforce proposes a new UK data protection law that would give “stronger rights and powers” to consumers, place “proper responsibility” on companies using data, and free up data for innovation. The taskforce also recommends changes are made to permit automated decision-making for machine learning and to remove the human review of algorithmic decisions required by the GDPR. The GDPR is a “tickbox exercise” with an “overemphasis on consent” that has led to people being bombarded with complex consent requests, the report says. It believes there are alternative ways to process data that do not require consent. One option could be the creation of “data trusts” or “data fiduciaries” – private and third-sector organisations to whom consumers would delegate their data authorisations and negotiations, it says. “The GDPR is prescriptive, inflexible and particularly onerous for smaller companies and charities to operate… Compliance obligations should be more proportionate, with fewer obligations and lower compliance burdens on charities, SMEs and voluntary organisations,” the report recommends. The taskforce also calls for regulatory reform in financial services, including insurance. “Financial services are a key UK strength. But the tangled web of EU-derived regulation needs a thorough overhaul if we are to build on that strength. This will involve moving away from the EU’s code-based system to a more principles-based approach based on common law,” it says. In particular, the taskforce calls for changes to the UK’s Solvency II regulations, which are currently being reviewed by HM Treasury. “Solvency II is probably one of the world’s most restrictive prudential regimes. Parts of the regulation do not suit the UK’s insurance sector, are a block to investment and have reduced competitiveness,” the report states. “With sensible changes to pensions and insurance regulation that preserve the highest standards of consumer protection and uphold financial stability, the government could unlock over £100bn of investment in small and scaling-up businesses across the UK, green projects, infrastructure and a range of other areas,” it adds. The taskforce recommends an immediate reduction in insurers’ risk margins by 75%, the simplification of reporting requirements, and refining matching adjustments. It points to KPMG analysis commissioned by the Association of British Insurers that shows a 75% reduction in risk margins would release roughly £35bn of capital. The theory goes that this could be used to support the post-Covid-19 economic recovery and investments in productive long-term assets in the UK, without a material impact on policyholder protection. However, the report warns that “confusion” within government may hamper Solvency II reform. “While HM Treasury is leading work on these issues, there is a sense of confusion as to which departments, for example DWP or the Treasury, are responsible for driving this forward. We must ensure these transformative reforms are not missed through slow delivery or a lack of ambition,” the report notes.

GDPR could be the target of UK’s post-Brexit ‘red tape’ cutting

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