Jobs-to-India claim branded 'ludicrous'

The Scotsman ^ | Fri 20 Aug 2004 | Alan McEwen

[CarrotAndStick]

CLAIMS that Scottish Widows owner Lloyds TSB will violate the Data Protection Act by transferring jobs to India were today branded "ill-founded and ludicrous" by a legal expert.

An unnamed bank customer has asked for the Government-appointed Information Commissioner to rule on whether it is legal for Lloyds TSB to transfer personal data files out of Europe without the customer’s consent.

The challenge threatens to throw plans by several banking giants to shift jobs to the sub-continent into chaos - with hundreds of posts in the Capital alone considered under threat from such off-shoring plans.

But today national law firm Rowe Cohen has claimed that the protester’s opposition is flawed. Stuart Room, head of the Data Protection Unit at the Manchester-based company, said: "This argument has been used time and time again and is another example of an attempt to manipulate the Data Protection Act of 1998.

"There are mechanisms in the Act which make moves such as this lawful. If the bank has the correct contract in place, then this is likely to be another case doomed to failure."

Lloyds TSB’s proposals to outsource work to India are being challenged on the grounds that they break the Data Protection Act by processing "sensitive personal data" abroad without the consent of customers.

Bindman’s, the solicitors handling the case, believes permission to transfer data to a country that does not have the same legal safeguards as the UK must be in the form of customers providing written consent.

India is not included on the EU’s list of countries that offer adequate protection as are legally required by the Data Protection Act 1998. However, Rowe Cohen contends that tougher levels of protection will soon be in place. Mr Room added: "India announced in July that it was introducing a new law which will bring it in line with European regulations and this should see the end of such allegations."

A spokeswoman for Lloyds TSB today maintained that the bank had taken the necessary steps to conform to data legislation. She said: "These concerns are completely unfounded and unnecessarily alarmist. The protection of customer data is, of course, of the utmost importance to us.

"We constantly monitor security and compliance in our operations and have stringent measures in place to ensure the protection of customer data wherever it is processed."

Scottish Widows, which is owned by Lloyds TSB, has created 50 jobs in India in a pilot scheme which could pave the way for hundreds of Scots jobs to move to India, unions claim. The company employs more than 3000 people in the Capital at sites including Morrison Street, Dalkeith Road and Orchard Brae.

The test case brought by an unnamed customer has been backed by Lloyds TSB Group Union, which is strongly opposed to any moves to transfer jobs abroad.

Peter O’Grady, assistant secretary of Lloyds TSB Group Union, said Rowe Cohen’s legal opinion would not be enough to stop the challenge from going ahead.

He added: "We do not believe this is ludicrous. We have taken our own legal advice from Bindman’s and they have told us that, at the present time, India does not fulfil the requirements of the Data Protection Act. We are seeking a ruling to clarify the matter.

"Banks accounts can contain very sensitive information. Scottish Widows, for example, has insurance policies complete with medical histories. That should not be readily available to anyone who wants it."

[snowsislander]

I don't know anything about the Data Protection Act, but I believe that banks in the U.S. that are shipping consumer customer information to India have a similiar type problem with the Gramm-Leach-Bliley Act, although I am unaware of any such moves as of yet to challenge this activity.

[dljordan]

My company is getting around the law by shipping the system operations to South America and leaving the actual data here in the U.S. The foriegn workers still have access to the confidential data it's just not in their country. Of course we know how loyal people in South America are to the U.S. and it's people. Those clever executives, I guess they never heard of corporate espionage and this is after the FBI caught two Chinese spies at one of our facilities. Go figure.

[snowsislander]

My company is getting around the law by shipping the system operations to South America and leaving the actual data here in the U.S. The foriegn workers still have access to the confidential data it's just not in their country.

Wow. That doesn't sound good. If it is consumer private information held by a bank or banks (not commercial information, which is not protected by GLBA), then that would seem to have a problem under GLBA -- as it should, because it seems to be shoddy practice in general. Every location and every one that has access to private consumer information is subject to regulatory examination, even if they are an offshore TSP. If a bank is knowingly trying to avoid disclosing that consumer information is being serviced offshore, they may be putting themselves in a false position.