What Is Data Fiduciary And Its Role?

A data fiduciary is an individual, company, or organization that decides the purpose and means of processing personal data. Under laws like the Digital Personal Data Protection Act, 2023 (DPDP Act), data fiduciaries carry the critical responsibility of ensuring that the personal data they handle is processed lawfully, transparently, and securely. Their role is central to safeguarding individuals’ privacy and upholding data protection principles.

Role and Responsibilities of a Data Fiduciary

Determining Purpose and Means of Processing:
The data fiduciary defines why (purpose) and how (means) personal data will be collected, used, stored, or shared. This control makes them responsible for all processing activities related to that data.

Obtaining Informed Consent:
They must seek clear, specific, and informed consent from the data principal (the individual whose data is being processed) before collecting or using their personal data, except in cases explicitly allowed by law.

Implementing Data Minimization and Purpose Limitation:
The fiduciary should only collect data that is necessary for the specified purpose and must not use it beyond that scope.

Ensuring Data Security:
They are obligated to implement robust security safeguards to prevent unauthorized access, data breaches, or misuse of personal data. This includes encryption, access controls, and regular audits.

Maintaining Transparency:
Data fiduciaries must inform data principals about the nature of data collected, purposes of processing, retention period, and any third parties involved. This transparency builds trust and accountability.

Respecting Data Subject Rights:
Individuals have rights such as accessing their data, correcting inaccuracies, withdrawing consent, data portability, and requesting deletion. The fiduciary must facilitate and respond promptly to such requests.

Notification of Data Breaches:
In the event of a data breach, the fiduciary must promptly notify the Data Protection Board and affected individuals, detailing the nature of the breach and remedial measures taken.

Accountability and Record-Keeping:
Data fiduciaries must maintain records of data processing activities and be accountable to regulatory authorities for compliance with data protection laws.

Engaging with Data Protection Authorities:
They must cooperate with investigations and comply with orders or penalties issued by the Data Protection Board or relevant regulatory bodies.

Example

Scenario:
An e-commerce company collects customers' personal details, including names, addresses, payment information, and shopping preferences to process orders and improve marketing strategies.

Steps:

• The company acts as a data fiduciary by defining how customer data will be used.
• It obtains explicit consent from customers before collecting data, explaining the purpose clearly.
• Data collected is limited to what is necessary for order processing and marketing.
• The company applies encryption and access controls to protect data from unauthorized access.
• Customers are informed about their data rights and can request access or correction at any time.
• If a breach occurs, the company promptly notifies affected customers and the Data Protection Board.
• Regular audits and compliance checks are conducted to ensure ongoing adherence to data protection laws.

This example illustrates the comprehensive role of a data fiduciary in responsibly managing personal data and protecting consumer rights.