Notifiable Data Breaches Scheme: draft guidance materials demonstrate that preparation is paramount

By David Benson, Sam Fiddian

12 Oct 2017

With less than six months to prepare for the mandatory data breach regime, businesses and other organisations have some better guidance on how to get ready.

The Privacy Act 1988 (Cth) will include a mandatory notifiable data breaches scheme (the NDB Scheme) from 22 February 2018.

On 29 September 2017, the Office of the Australian Information Commissioner (OAIC) released its latest tranche of draft guidance materials. Those materials provide greater clarity as to the OAIC's expectations of entities which will be subject to the NDB Scheme (APP Entities). Whilst these materials are currently in draft, we do not expect their final form to differ in any material respect.

This article highlights the key takeaways from those materials which organisations should consider as they prepare for the introduction of the NDB Scheme.

Latest draft guidance materials

The latest tranche of materials released by the OIAC to help organisations prepare for the introduction of the NDB Scheme includes guidance on:

  • an organisation's obligation to assess a suspected data breach;
  • what to include in an eligible data breach statement; and
  • the operation of certain exceptions to notification obligations.

The OAIC has also released a draft pro forma eligible data breach statement and a proposed new chapter of the OAIC’s "Guide to privacy regulatory action" on data breach incidents.

Assessing a suspected data breach

The NDB Scheme will require APP Entities to promptly notify the OAIC and any potentially affected individuals if it is aware of reasonable grounds to believe that there has been an 'eligible data breach'.

Where an APP Entity only has reasonable grounds to suspect that there may have been an "eligible data breach", the notification obligation does not immediately arise. However, the APP Entity must complete a "reasonable and expeditious" assessment into the relevant circumstances within 30 days. The OAIC's expectation is that APP Entities treat the 30 day limit as a maximum, not the standard. Where compliance with the 30 day limit is not possible, APP Entities will need to document the reasons for the delay in a manner which demonstrates that it has taken all reasonable steps to complete the assessment within 30 days.

The OAIC's position is that the clock starts ticking from the time that a compliance officer, or "person with appropriate seniority" becomes aware of information that suggests a suspected data breach may have occurred. This will mean different things to APP Entities of different sizes. However, in all cases, APP Entities will need to ensure that their staff are appropriately trained to report circumstances which may evidence a data breach.

It will be left up to APP Entities to develop their own procedures for assessing a suspected breach, which could most conveniently be incorporated in the APP Entity's data breach response plan. As well as identifying the person or persons responsible for initiating assessments, an APP Entity's procedures should set out:

  • the way in which a decision is to be made as to whether legal advisers should be engaged so that the assessment process may be subject to a claim of legal professional privilege;
  • who is to lead the assessment and the resources available to that person;
  • what investigative steps are to be taken; and
  • who is to decide whether the facts uncovered by the investigation give rise to a belief that there has been an "eligible data breach".

The assessment process and its outcome should be appropriately documented so as to assist in any future review of the steps taken by the entity. This will be particularly important if the outcome of the assessment is that no "eligible data breach" has occurred.

Contents of an eligible data breach statement

If an APP Entity forms the belief that there has been an "eligible data breach", whether or not as a result of an assessment, the APP Entity must prepare an Eligible Data Breach Statement, provide a copy of it to the OAIC, and notify affected individuals of its contents as soon as practicable.

The Statement must contain:

  • the identity of the APP Entity;
  • the APP Entity's contact details;
  • a description of the data breach and the kinds of personal information involved sufficient to enable affected individuals to assess the possible impact on them of the data breach; and
  • what steps the entity recommends that individuals take in response to the data breach.

Given the Statement must be prepared promptly, and affected individuals notified of its contents, APP Entities will want to ensure that their data breach response plan prioritises the identification of the kinds of information involved in the breach. It would also be prudent for APP Entities to brainstorm the types of steps that might be taken in response to a data breach having regard to the types of personal information held so as to be prepared to include those steps in the Statement.

The draft pro forma Statement released by the OAIC encourages APP Entities to provide information above and beyond that required by the Privacy Act, including the date of the data breach, the date the entity became aware of the data breach, the cause of the data breach and the number of individuals affected. While this information need not be provided, APP Entities should assess what further information it is prepared to provide on a case by case basis. Generally speaking, unless there is a compelling reason not to provide at least some of the additional information sought by the OAIC, doing so may be of benefit to an APP Entity in that:

  • it will help demonstrate to the OAIC, and affected individuals if the entity so chooses, that it is being open and transparent; and
  • the OAIC has said that it may request the information if it is not proffered, and has the power under the Privacy Act to make preliminary inquiries to determine whether or not to investigate whether the data breach amounts to an interference with privacy.

Operation of the "multiple holders" exception

Where the personal information the subject of the data breach is contained in records in the possession, or control, of more than one APP Entity, the NDB Scheme only requires one of those entities to meet its obligations under the scheme, but all are liable should those requirements not be met. This situation may arise, for example, where the relevant records are stored on a Cloud service provider's systems. Which entity is to take responsibility is left to the entities concerned. However, the OAIC suggests, for good reason, that it should generally be the entity with the most direct relationship with the affected individuals.

This is likely to have a significant impact on an APP Entity's relationship with third party service providers, such as Cloud service providers. In particular, APP Entities will need to ensure that service contracts contain appropriate terms which address:

  • the provision of notice by the service provider to the APP Entity upon the occurrence of a breach;
  • who will make an assessment as to whether the breach is an "eligible data breach";
  • if the APP Entity is to make that assessment, what information the services provider must give to the APP Entity and how quickly this must occur;
  • who is to prepare and distribute the Statement in the event of an "eligible data breach", what that Statement is to contain over and above that which is required by the Privacy Act (eg. the names of all parties who held the relevant information) and what input each party is to have into its content; and
  • who is liable for the cost of complying with the NDB Scheme.

The OAIC's draft guidance emphasises the importance of adopting this approach. The aftermath of a data breach is not the time to be attempting to agree upon these matters, particularly where each entity is likely to be concerned by potential liability issues which may arise further down the track.

Approach to enforcement

The proposed new chapter of the OAIC’s "Guide to privacy regulatory action" sets out how the OAIC intends to respond to data breach notifications. The factors which will determine how the OAIC responds include the available resources and the OAIC's evaluation of the extent to which taking action in response to the notification will further the objects of the Privacy Act.

In determining the appropriate response, the OAIC will no doubt consider:

  • the type of personal information involved;
  • the number of affected individuals;
  • whether the data breach has been contained;
  • the steps the APP Entity has taken to mitigate any harm done to affected individuals; and
  • the measures taken, or being taken, to minimise the risk of a similar breach occurring in the future.

Where there has been a breach of the Privacy Act as a result of a data breach, the powers of the OIAC include the ability to seek enforceable undertakings, injunctions or civil penalties of up to $2.1 million. That being so, it is in the interests of APP Entities that they be able to swiftly identify and contain data breaches as doing so is likely to lessen the regulatory response.

What should you do

The introduction of the NDB Scheme is less than six months away. That being so, APP Entities should continue their preparation for the commencement of the NDB Scheme by:

  • auditing their current information security processes and procedures to ensure they are adequate;
  • preparing a data breach response plan (or updating their current plan) including by reference to the guidance materials released by the OAIC; and
  • providing training to relevant officers and employees as to any role they may have in responding to data breaches.

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