Background of the Enforcement Action
In an age where data is the new oil, the role of a Data Protection Officer (DPO) has become indispensable for any organisation processing personal data. The recent enforcement action against Toyota Bank Polska S.A., as data controller, by the Polish Data Protection Authority serves as a cautionary tale for global organisations, including those in India preparing for compliance under the Digital Personal Data Protection Act, 2023 (DPDPA). Toyota Bank was fined over PLN 576,000 (approx. ₹1.15 crore) for two key lapses:
1.Improper structuring of the DPO role, particularly, the lack of independence and direct reporting lines, and
2.Failure to document and assess profiling practices in their processing activities and impact assessments. These findings highlight critical considerations while appointing a DPO. 1. Ensure Functional Independence of the DPO Under the DPDPA, a Significant Data Fiduciary must appoint a DPO who shall represent the organisation and act as the point of contact. The Toyota Bank case shows the risks of embedding the DPO in operational teams, especially those responsible for data processing or IT security. Their DPO was positioned within the security department and reported to a director who was himself managing data operations, thus leading to a clear conflict of interest. Best Practices for Indian Organisations:
- The DPO must be based out of India.
- The DPO must not wear multiple hats that create a conflict with their oversight function.
- Ensure independent reporting directly to the Board, CEO, or senior-most management, not mid-level executives.
- Define their role clearly and exclusively in the context of privacy governance and compliance. 2. Administrative Placement is Not Just ‘Administrative’
Toyota Bank argued that the DPO’s placement in the security department was merely administrative, limited to things like leave approvals and financial matters. However, the regulator noted that even such structural issues affect the perceived independence and authority of the DPO.
Best Practices for Indian Organisations: - Even if functionally independent, a DPO’s hierarchical and operational placement matters.
- Ensure DPOs are not subordinate to operational heads involved in data processing.
- Their appointment should be formally recognised, ideally with a dedicated team or support infrastructure. It should not be treated like just another administrative appointment. 3. Anticipate Regulatory Expectations
The Polish regulator applied the European Data Protection Board’s (EDPB) fining methodology, ensuring fines were effective, proportionate, and dissuasive. Though no case studies are in place presently, under DPDPA, penalties can reach up to ₹250 crore for non-compliance, which can be a significant risk for the company. Best Practices for Indian Organisations:
- Do not view the DPO role as a box-checking exercise. It must be strategically embedded into governance.
- Regular audits, training, and board-level reporting must form part of your compliance culture.
- Equip your DPO with budget, autonomy, and authority. Lessons Learned: Appointing a DPO the Right Way
The Toyota Bank case serves as a strong reminder that superficial compliance is no longer enough. For Indian organisations preparing under the DPDPA, here are the top lessons to internalise:
1. Independence Is Non-Negotiable
2. Direct Reporting to Top Management
3. Avoid Conflicts of Interest
4. Document High-Risk Activities Like Profiling
5. Conduct DPIAs Proactively
6. Do not Underplay Organisational Placement
7. Transparency with the Regulator Matters
8. Build a Culture, Not Just a Role Final Take
As India marches towards implementation of the DPDPA, organisations must take a proactive stance in privacy governance. Appointing a DPO is not a mere procedural formality, but it is a core pillar of data accountability. Learning from global precedents like Toyota Bank, Indian organisations must invest in structural independence, adequate documentation, and transparent processing practices to stay compliant and gain user trust. In a regulatory environment where enforcement is becoming more sophisticated and user awareness is on the rise, privacy cannot be an afterthought. Organisations that embed privacy by design and empower their DPOs stand not just to avoid penalties, but also to earn a competitive advantage, and long-term data resilience. Get Started. Have Something Else to Add?
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