Privacy reforms - why Australian businesses must move from awareness to action

A landmark Federal Court decision has sent shockwaves through the Australian business community, confirming that the era of regulatory leniency on data privacy is over. The first civil penalty enforced under Australia’s amended Privacy Act, $5.8 million against Australian Clinical Labs following a major cyber incident, signals a new phase of proactive compliance and accountability for organisations handling personal information.

The latest Federal Court ruling demonstrates regulators are no longer satisfied with promises of future improvement or reactive measures after incidents occur. Instead, there is now a clear expectation for proactive compliance, requiring organisations to embed data privacy practices throughout every part of their operations. This change signals businesses must move beyond awareness and take concrete steps to ensure data protection is a core organisational priority.

What does the ruling mean?

The judgment clarifies several critical obligations for organisations:

• Reasonable steps - businesses must take reasonable steps to secure personal information, assess and notify breaches promptly, and maintain robust authentication and forensic logging
• Individual contraventions - each affected individual may be treated as a separate contravention, multiplying potential penalties
• Data retention - the regulator is now scrutinising whether data is necessary to retain and whether adequate safeguards are in place. Businesses must justify why they hold personal data and how it is protected.

Universal impact across sectors

The ramifications of Australia’s strengthened privacy regime are not limited to a single industry, they are truly universal. Every organisation that collects, stores, or processes personal information is now subject to heightened scrutiny and accountability. This includes sectors as diverse as retail, finance, healthcare, technology, education, and professional services.

For boards and executives, privacy obligations have become inseparable from broader business risk management. Data protection is now as critical as financial controls and operational resilience. Organisations must ensure privacy is embedded into their governance frameworks, risk assessments, and day-to-day operations.

The expectation is clear, privacy compliance is no longer a back-office function or an IT-only concern. It is a strategic imperative that demands attention from leadership and every business unit. Those who fail to act swiftly and decisively risk not only regulatory penalties but also severe reputational damage, loss of customer trust, and disruption to business continuity. In today’s environment, a single privacy breach can have far-reaching consequences, impacting shareholder value and long-term viability.

Penalties are steep and growing

The financial consequences of non-compliance with the Privacy Act have escalated dramatically. Under the amended legislation, maximum penalties can reach $50 million or more, calculated under the ‘greater-of’ framework. This means penalties may be based on the most significant measure, whether that is a fixed amount, a percentage of turnover, or the benefit obtained from the breach.

The recent Federal Court ruling has set a precedent for how penalties are determined and what constitutes a contravention. Notably, each individual affected by a privacy breach may be treated as a separate contravention, multiplying the potential liability for organisations. This approach underscores the seriousness with which regulators and courts now view data protection failures.

Beyond the headline figures, the judgment provides practical guidance on what the Office of the Australian Information Commissioner and the courts will consider as ‘reasonable steps’ to protect personal information. Organisations must demonstrate they have robust systems and processes in place, tailored to the volume and sensitivity of the data they hold, the potential harm to individuals, their size and sophistication, and the evolving cyber security landscape. Previous incidents and threats are also taken into account, raising the bar for ongoing vigilance and improvement.

What are reasonable steps?

Determining what constitutes ‘reasonable steps’ to protect personal information is now central to privacy compliance in Australia. The recent Federal Court ruling has provided much-needed clarity, but the reality is these steps will vary depending on the unique circumstances of each organisation. Regulators and courts will look beyond generic policies or one-size-fits-all solutions, instead assessing whether businesses have tailored their approach to the specific risks they face. When evaluating whether an organisation has met its obligations, several key factors are considered:

• The volume and sensitivity of the personal information held
• The potential harm to individuals if information is accessed or disclosed
• The size and sophistication of the business
• The cyber security environment in which the business operates
• Any previous threats or cyberattacks made against the business.

The path forward

Australian businesses must move decisively from awareness to action. Privacy reforms have fundamentally changed the risk landscape. Organisations must embed data privacy into their operations, justify their data retention practices, and ensure robust safeguards are in place.

 

How BDO can help 

Navigating the new landscape of privacy compliance can be complex and challenging for organisations of all sizes and sectors. BDO’s experienced team of forensic specialists can help your business move from awareness to action, ensuring you meet your obligations under the amended Privacy Act and protect your reputation. If you would like to learn more about our services, contact us today.