The rapid rise of smart devices in our homes and workplaces—from intelligent speakers to connected kitchen appliances—brings incredible convenience. However, these “Internet of Things” (IoT) products often collect vast amounts of personal information, raising important privacy questions. To address these, the UK’s independent regulator, the Information Commissioner’s Office (ICO), recently launched a draft IoT privacy guidance for developers and manufacturers of smart products.
This new guidance, open for consultation until 7th September 2025, underlines the ICO’s commitment to ensuring that privacy is a core consideration, not an afterthought, in the design and use of these increasingly common devices. For UK businesses, particularly small enterprises, freelancers, and innovators in the tech space, understanding this guidance is crucial for fostering consumer trust and ensuring compliance with UK GDPR.
Why is New Guidance Needed for IoT?
Think about your smart thermostat, your fitness tracker, or even your internet-connected security camera. These devices are constantly gathering data: your daily routines, your health metrics, your movements, and even snippets of your conversations. This data can be incredibly personal, sometimes falling into “special category data” under UK GDPR, such as health or biometric information.
The challenge for businesses creating and selling these products lies in how to manage this data responsibly, transparently, and securely, all while providing innovative services. The ICO’s draft guidance aims to provide much-needed clarity, building on existing UK GDPR principles but applying them specifically to the unique landscape of IoT.
Demystifying the ICO’s Approach: What Does the Guidance Seek to Achieve?
The ICO’s guidance isn’t about stifling innovation. Instead, it’s about embedding privacy into the very fabric of smart product development. It seeks to achieve a balance: allowing for the benefits of smart technology while empowering individuals to have meaningful control over their personal data.
At its core, the guidance reinforces the principles of UK GDPR, tailored for the IoT environment. Let’s break down what the ICO wants to see from businesses:
1. Prioritising Privacy by Design and Default
The ICO wants privacy to be a foundational element, not an add-on. This means that data protection considerations should be woven into every stage of a smart product’s lifecycle, right from the initial design phase. It’s akin to building a house with safety features integrated from the ground up, rather than trying to bolt them on once the house is built.
- Practical Steps:
- Early Assessment: Conduct a Data Protection Impact Assessment (DPIA) early in the development process to identify and mitigate privacy risks.
- Data Minimisation: Only collect the personal data that is absolutely necessary for the product to function. If a smart fridge doesn’t need your precise location to order milk, it shouldn’t collect it.
- Default Settings: Ensure that the default settings for any smart product are the most privacy-friendly possible. Users should have to actively opt-in to less private settings, not opt-out.
2. Transparency and Fair Processing
One of the public’s biggest concerns is often a lack of understanding about what data smart devices collect and how it’s used. The ICO’s guidance emphasises clear, accessible communication.
- Practical Steps:
- Clear Privacy Information: Provide privacy notices that are easy to understand, even for those without a technical background. Avoid legal jargon. Think of it as explaining how your smart speaker uses data to your grandmother – it needs to be simple and reassuring.
- Timely Information: Inform users about data collection at the right moment. For instance, if a new feature requires additional data, provide clear notice before it’s enabled.
- Fair Use: Ensure that personal data is processed in ways that individuals would reasonably expect. Using data for unexpected purposes, even if technically permitted, could be deemed unfair.
3. Lawful Basis for Processing Data
Under UK GDPR, you need a valid legal reason (a “lawful basis”) to process personal data. For smart products, this often comes down to consent, contractual necessity, or legitimate interests. The guidance provides clarity on how these apply to IoT.
- Practical Steps:
- Genuine Consent: If you rely on consent, it must be freely given, specific, informed, and unambiguous. For IoT devices, this can be challenging due to limited screen space. The guidance encourages creative solutions, such as QR codes linking to detailed privacy information or in-app prompts.
- Contractual Necessity: If data is essential for the product to deliver its core service, this might be a lawful basis. However, beware of bundling non-essential data collection with core services.
- Legitimate Interests: If you’re relying on legitimate interests, you must conduct a thorough balancing test, weighing your interests against the individual’s rights and freedoms. This should be documented.
4. Security of Personal Data
Smart products, by their very nature, are connected to networks, making them potential targets for cyber threats. The guidance stresses the importance of robust security measures to protect personal data from unauthorised access, loss, or damage.
- Practical Steps:
- Technical and Organisational Measures: Implement appropriate security, such as encryption, multi-factor authentication, and regular security updates.
- Secure by Default: Ensure that devices come with strong default security settings, like unique and strong default passwords, and that users are prompted to change them.
- Regular Updates: Provide ongoing security updates for devices throughout their expected lifespan, and inform users about these updates.
5. Upholding Data Subject Rights
Individuals have specific rights under UK GDPR regarding their data, including the right to access, rectify, erase, and object to processing. The guidance reminds developers and manufacturers of their obligation to facilitate these rights for users of smart products.
- Practical Steps:
- Accessible Mechanisms: Make it easy for users to exercise their rights. This might involve user-friendly dashboards or in-app controls to manage their data.
- Clear Instructions: Provide clear instructions on how users can access, correct, or delete their data from the device or associated cloud services.
- Deletion Protocols: Have clear procedures for deleting personal data when a user requests it or when it’s no longer needed.
Impact on UK Small Businesses and Freelancers
While this guidance primarily targets manufacturers and developers, it has significant implications for smaller UK businesses and freelancers who might:
- Develop or sell IoT products: If you design or market smart devices, this guidance is your essential roadmap to compliance.
- Integrate IoT into their services: For example, a small business offering smart home installation services needs to understand the privacy implications of the devices they install.
- Use IoT in their operations: Even if you’re just using smart devices in your office, the principles of data minimisation, security, and transparency still apply.
The ICO wants to ensure a level playing field and prevent a “race to the bottom” where privacy is neglected. For smaller businesses, this guidance offers an opportunity to build trust with customers by demonstrating a commitment to responsible data handling.
- Checklist for Small Businesses and Freelancers:
- Understand Your Role: Are you a “controller” (determining why and how data is processed) or a “processor” (processing data on behalf of a controller)? This dictates your responsibilities.
- Review Your Products/Services: If you offer or use IoT products, assess the types of personal data they collect. Is any of it “special category data”?
- Conduct DPIAs: For any new or significantly changed IoT product or service, carry out a DPIA. Even a simple one is better than none.
- Simplify Your Privacy Notices: Make sure your privacy information is clear, concise, and easily accessible.
- Implement Security Measures: Ensure your IoT devices and associated systems have strong security from the outset.
- Plan for Data Subject Rights: How will you handle requests from users who want to access, correct, or delete their data from your smart products?
- Stay Informed: Keep an eye on the ICO’s updates, especially after the consultation period closes in September 2025.
Myth vs. Fact: IoT Privacy
Myth: “UK GDPR doesn’t really apply to small, non-commercial IoT devices in my home.” Fact: If your device processes personal data, UK GDPR principles apply. While enforcement for purely personal, household use is limited, if you develop or sell such devices, you have obligations.
Myth: “As long as I get a ‘tick-box’ consent, I’m fine.” Fact: Consent under UK GDPR must be specific, informed, and unambiguous. Forcing users to accept broad terms just to use a device is unlikely to be valid.
Myth: “It’s too complicated for my small business to comply with all this.” Fact: The ICO provides extensive resources for small businesses. Focusing on the core principles—only collecting necessary data, keeping it secure, and being transparent—goes a long way. The new guidance aims to simplify, not complicate.
What Does This Mean for the Future?
The ICO’s draft guidance is a clear signal: the era of “collect everything just in case” for IoT devices is over. Regulators are increasing their scrutiny, and consumers are becoming more aware of their privacy rights. By actively engaging with this guidance, businesses can not only ensure compliance but also build a stronger, more trustworthy relationship with their customers. This is about fostering a future where smart technology truly enhances lives without compromising personal privacy.
The consultation period offers a valuable opportunity for businesses and stakeholders to provide their insights, shaping the final guidance to be as practical and effective as possible. By participating, you can help ensure that the UK remains at the forefront of responsible innovation in the fast-evolving world of the Internet of Things.