December 5 2013.

New data protection legislation being discussed by Europe's Justice and Home Affairs Ministers tomorrow,  Friday the 6th of December, has the potential to place an undue financial burden on small firms, says the Federation of Small Businesses (FSB) and the British Bankers' Association (BBA).

Additions to current proposals from the European Parliament's Civil Liberties, Justice and Home Affairs Committee would require small firms which hold details of 5,000 customers or more to employ a Data Protection Officer at an estimated cost of £64,000 per year, conduct a data protection impact assessment costing £11,200 per year and carry out a compliance review every two years.

FSB research found that one in five (19%) of small firms already consider data protection to be the most burdensome regulation to comply with. The proposals from the European Parliament would only exacerbate the situation for many businesses.

John Allan, national chairman, Federation of Small Businesses, said: "If you are a small business with 4,500 customers on your mailing list you might reconsider plans to grow your business for fear of having to spend over £75,000 each year in order to comply with data protection regulations. We urge European leaders not to press forward with this law in its current form as small businesses would clearly suffer. European leaders should look to the findings of the Prime Minister's Business Led Taskforce report into EU regulation which called for lawmakers to think of the impact on the smallest companies when drawing up new laws."

Irene Graham, managing director of Business Finance, British Bankers' Association, said: "These new rules have the potential to place real burdens on businesses across Europe. We would urge EU politicians to reconsider their approach to ensure small businesses are not unduly affected."