When does public interest become public prurience? And how much should be revealed about your salary? Jo Sanders-Key finds that nothing is as private as it used to be
A CULTURAL SHIFT is underway in the UK from innate reticence concerning financial matters to the media and public clamouring to know details of top earners’ pay, perks and purchasing pleasures.
The MPs’ expenses scandal, bankers’ bonuses, BBC contracts with top talent, and even the pay of senior management in private companies – the Cadbury sale to Kraft, for example – are driving this change.
People may discover an uncomfortable truth: that disclosures originally made in the context of corporate transactions and regulatory regimes could be put to a different use if an unexpected event propels an organisation into the media spotlight.
Journalists routinely trawl the internet for personal details these days, and increasingly they find them. Nothing makes a better picture than the chief executive’s substantial property and luxury car parked in the drive, along with details of his pay and pension.
Of course, we accept and welcome scrutiny by investors and shareholders of the proper accounting and management of companies. Similarly, as taxpayers we welcome the close monitoring of expenditure by public bodies.
But there is a distinction to be drawn between what the public and interested parties have a right to know, and what the public merely enjoys knowing about private individuals. The issue is not one of secrecy but of information management: ensuring that those with a legitimate interest in oversight and scrutiny are able to access information, whilst at the same time, protecting private individuals from prurient interest in their personal arrangements.
The distinction is blurring at a rapid pace, often with a trail of revelatory consequences that many are not aware they risk.
In the City, a raft of corporate governance legislation has restricted the ability of private individuals to maintain confidentiality in financial arrangements. The Walker Review of corporate governance in the financial industry recently recommended that banks publish details of the pay of executives in bands (£1-2.5m, £2.5-5m, and in £5m bands thereafter) detailing only the number of individuals within each band.
This gossamer of anonymity almost goads the media into trying to identify top earners, especially in institutions part-owned by the Treasury.
In addition, the Financial Services Authority (FSA) Remuneration Code, which came into force at the start of this year, requires large banks and building societies to submit statements of remuneration policy to the FSA, but it may also request information not released publicly by the institutions. The danger is that the FSA is itself a public body subject to the Freedom of Information Act 2000 – meaning that information it holds (even about third parties) may be the subject of a disclosure request.
It is not only financial disclosures that attract media interest. Personal details disclosed through, for example a planning application for a home extension, may result in a censorious article commenting upon significant expenditure on gyms or a home cinema.
There is adequate evidence that the risk of widespread dissemination of personal financial information is growing as regulatory reform aimed at good corporate governance collides with freedom of information legislation.
All is not lost for the prepared. There are steps that can be taken to assert control over disclosure of personal information by planning ahead and anticipating media interest.
For example, when making mandatory regulatory filings consider whether a set of redacted documents should be supplied for public access, with details such as home address removed.
The US Securities and Exchange Commission has a regime to protect confidential material, such as service contracts, but this requires a special treatment request in advance. Transactional advisors may not always consider the long-term ramifications of such filings.
In the UK, the Information Commissioner has issued guidance regarding the disclosure of salary information by public bodies in response to freedom of information requests. The organisation must balance whether the benefit in revealing an employee’s remuneration is outweighed by potential harm, distress or intrusion to them.
But it will be for each individual to ensure that their employer is applying the test correctly when it responds to a request for information to be disclosed.
Where an individual is at high risk of media interest, a privacy audit should be carried out to consider the extent to which personal information is available and how it might be protected.
This may include reviewing service contracts to contemplate provisions requiring a subject to be notified if an employer is asked or required to disclose sensitive personal information externally.
The law recognises an individual’s right to a “private and family life” under the Human Rights Act 1998 and the Court may prevent acts which interfere with this right. However, the right is qualified and where there is conflict between it, and the competing right to freedom of expression (which includes the public’s right to know), a balancing test must be carried out to assess which right is the strongest.
This is a controversial and highly fact-sensitive test but it does mean that, unless there is some legitimate public interest, information which people expect to be confidential – and this would obviously include their personal finances – is given legal protection.
In addition, the Press Complaints Commission has issued guidance concerning the publication of address details and photographs of properties belonging to high profile individuals, especially where this may give rise to security risks. There are also self-help measures that may be taken such as screening the property from vantage points that could be used by paparazzi.
The popularity of measures which permit scrutiny of the financial affairs of the affluent business and professional classes by the media and public means that the tide of legislation in this area is unlikely to recede.
Combine those measures with the widespread availability of personal information through professional networking and other websites and the problem is compounded. A journalist may just find discovering details about your life would hardly be easier if you left bank statements and a diary on their desk.
Jo Sanders-Key is Senior Associate in the Media and Information Group, Harbottle & Lewis LLP