The Competition and Markets Authority (CMA) published a report in June 2015 regarding how firms collect and use customer data.
The report finds that both firms and consumers can benefit from effective use of data by firms. The firms themselves can improve targeting of consumers for marketing purposes, can improve service and prevent fraud. Consumers can gain from a more personalised service and can receive promotional material that is likely to be more relevant to them.
Many consumers do not understand how firms collect data, and fear it could be misused. However, the CMA says it has found evidence of some firms taking steps to raise awareness of privacy controls, and developing new tools to allow customers to manage their personal data more effectively. It suggests that firms could be encouraged to compete with each other on the effectiveness of their data controls. In the modern age, firms are increasingly likely to collect consumer data via their use of the internet or social media.
All firms need to process personal data in line with the Data Protection Act, and with the eight principles laid down by the data protection watchdog, the Information Commissioner’s Office. The forthcoming introduction of the European General Data Protection Regulation is expected to impose new requirements on firms – this legislation is still being drafted by the various bodies of the European Union.
The CMA urges firms to ensure that their customers know when and how personal data is collected from them, and how this data is then used.
Alex Chisholm, the CMA’s Chief Executive, said:
“As the use of consumer data increases, consumers are benefiting across a wide range of markets, including through improved services that offer more flexibility, greater choice between providers and more information to find better prices.
“However we also found widespread concerns about how such data is collected, incomplete awareness amongst consumers and hence a fragile level of trust – all of which has the potential to undermine benefits in future.
“As our report finds, consumer data markets are becoming increasingly relevant across the full range of our work. We wish to see greater transparency to ensure consumers can choose to continue to benefit from the collection and use of their data in efficient and competitive markets.”
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