The proposed social security laws will give fraud investigators the right to access people's bank accounts, credit card details and credit ratings without their knowledge.
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In a strongly worded letter, France warned that proposals in the Social Security Fraud Bill undermine key data protection principles and may amount to a breach of the Human Rights Act.
The Bill, which had its second reading in the House of Lords on 16 January, gives fraud investigators powers to inspect the personal information held by banks, building societies, utility companies and other organisations.
The Bill has already provoked concerns from credit reference agencies and banks, who fear that its proposals could undermine the public's confidence in the banking system.
In a critical letter to ministers, France warned that the Bill undermines four key data protection principles and lacks the controls needed to prevent abuse of the powers by Department of Social Security staff.
France said measures in the Bill are likely to damage the public's confidence in the way the Government processes information and could undermine the public's trust in the confidentiality promised by banks.
France singled out for particular criticism a clause in the Bill that gives inspectors the right to see the bank accounts of people they believe are more likely to commit fraud than others.
It could lead to inspectors unfairly targeting ethnic minorities or women in low paid jobs if statistics suggest that they are more likely to commit fraud. "In a large proportion of cases the DSS could obtain the information it requires by placing an obligation on benefit recipients and claimants to provide evidence as to their circumstances," France said.
France believes that the Bill may breach Article 8 of the European Convention on Human Rights, which gives everyone the right to privacy in their private and home life and has asked lawyers for an independent legal opinion.
She urged the Government to at least postpone the Bill until the Office of the E-Envoy and the Performance and Innovation Unit complete proposals for a government-wide strategy on information handling.
Minister denies data protection claims
Social security minister Jeff Rooker this week denied claims that his department has ignored data protection concerns in the Social Security Fraud Bill. In a letter to Computer Weekly, Rooker said that it would be unrealistic for benefit fraud investigators to "simply to ask people to provide bank account and other financial information".
"Fraudsters are determined and ingenious, and powers to obtain information from independent third parties are vital if we are to make any significant reductions in fraud and error," he said.
Rooker denied claims that the Bill will give benefit fraud investigators "free rein" to access bank accounts, credit card details, and credit ratings. Authorised investigators will only be able to gain access to information where there is a suspicion of fraud or where objective research indicates there is a higher than average risk of fraud. "This is by no means 'free rein' nor do we consider these to be 'sweeping powers'," he said.
Rooker's full letter will appear next week's issue