The estimate is made by Bridgette Wilcox, a partner in Cardiff-based legal firm Eversheds, which is offering to advise companies on the best way of tackling the implications of the Data Protection Bill. The bill was initiated following an EU directive and introduced in the House of Lords last month.
Supermarkets and direct marketing companies with vast databases of names will be directly affected. Wilcox says regulations governing how information - names and addresses, for example - is used for mailshots will be tightened up, and adds that recurring annual costs for businesses could be as much as pounds 630m. Costs for the voluntary sector are estimated at pounds 120m for start- up alone.
Meanwhile, companies which make decisions about employees based on automatically- processed details - such as the rate at which someone assembles equipment, types documents or answers telephone calls - also face severe restrictions under the new act, which could be in place by summer.
Wilcox, a partner in Eversheds' commercial department, believes the new rules on the processing of personal data will affect everything from confidential staff files to job application forms.
"If you just have a box-file and keep throwing bits of paper in there, that wouldn't count as a manual system. But for businesses with proper filing systems, it's going to be time-consuming."
She adds: "Individuals will have a right to know more about the information being processed about them. Certain information must be made available to those concerned; the information must be collected for specific purposes and, generally, the controller must not process it for any other purpose."
Sensitive information, such as details of race, sex, politics, trade union membership and religion, is granted particular protection under the bill. Job applicants, for example, must give specific consent before such data is processed.
In practice, this may mean a redesign of an application form. But while individual rights are strengthened, the financial and practical burden on businesses - particularly on human resources departments - will be colossal, warns Wilcox. "Our advice is to keep track of what's happening. Obviously, take action sooner rather than later and carry out an audit to see what information you are getting, where you get it, how you use it and how you store it, so you are ready to implement these changes."
One of the problems facing businesses is that filing systems within a company are often haphazard, with each fiefdom having its own peculiarities in the way it manually stores records. These, under the new act, will need to be realigned.
Eversheds is just one of the firms offering tailor-made workshops to help businesses to identify potential changes they will need to make. A spring-clean of records may also improve a firm's efficiency, according to Wilcox.
"We are finding with clients that sometimes the co-ordination isn't there. Everybody is doing their own thing. For some of them, it was the first time they looked at the issue in any detail."
For more information on seminars which assess the impact of the new data protection rules on businesses, telephone Karen Neil at Eversheds on 01222 471147.Reuse content