In October 2024, Austria’s Data Protection Authority (hereinafter: the “DSB“) delivered a clear message: you cannot appoint your managing director as your Data Protection Officer (DPO) without risking a hefty fine.
DSB imposed a €5,000 fine on a company for appointing its managing director as its Data Protection Officer (hereinafter: the “DPO“). The DSB found that the dual role created a clear risk of a conflict of interest, as there were insufficient safeguards to ensure the DPO’s independence in fulfilling their duties.
DSB discovered that the company had provided no dedicated working hours, no separate budget and no direct reporting line to the supervisory board – measures the authority considered essential to ensuring the DPO’s independence. This appointment was deemed a violation of Article 38(6) of the GDPR [1], which explicitly requires that the DPO’s other tasks and duties do not result in a conflict of interest.
This case serves as a cautionary example for other companies appointing C-level executives as DPOs, as well. Organizations should carefully assess whether their appointed DPO, especially those in executive or ownership roles, can truly act independently. Failure to ensure this requirement may lead to similar penalties and damage to organizational credibility.
EU Actions Against DPOs Doubling as CMO/IT/Legal/CFO
This Austrian ruling is far from isolated. In 2023, Belgium’s Data Protection Authority penalized a telecom operator whose DPO also headed marketing, reasoning that marketing strategies inherently shape “purposes of processing” and therefore cannot be overseen impartially by the same individual.
A year earlier in Germany, the Federal Commissioner for Data Protection publicly reprimanded a retailer whose in-house DPO also served as IT security lead and legal counsel, observing that merely blocking out “data protection hours” on someone’s calendar does not create genuine autonomy.
Even France’s CNIL has warned that any combination of DPO duties with finance or strategic roles compels controllers to replace internal appointees with an external DPO if they wish to satisfy the GDPR’s independence requirements.
In January 2024, the European Data Protection Board (EDPB) published its report on the 2023 Coordinated Enforcement Framework (CEF), focusing on the designation and position of Data Protection Officers (DPOs) across the European Economic Area (EEA). This initiative involved 25 supervisory authorities (SAs) conducting coordinated investigations to assess compliance with Articles 37–39 of the General Data Protection Regulation (GDPR). The EDPB’s report highlighted several challenges faced by DPOs:
- Absence of Designation: Some organizations failed to appoint a DPO despite being legally required to do so.
- Insufficient Resources: DPOs often lacked adequate time, budget, and support to fulfill their responsibilities effectively.
- Inadequate Expertise and Training: Many DPOs did not receive sufficient training to stay updated with evolving data protection laws and practices.
- Limited Independence: Instances were noted where DPOs held positions that could lead to conflicts of interest, undermining their independence.
- Restricted Access to Management: Some DPOs did not have direct access to the highest management level, which is essential for performing their duties effectively.
Additionally, EDPB’s Recommendation on the DPO function stipulates that national data protection authorities should take more initiative and enforcement actions regarding DPO function.
Why Conflict of Interest Matters so much?
At its heart, the GDPR enshrines the DPO’s right to operate “with independence” and to report directly to top management. If the DPO simultaneously controls budgets or defines processing purposes, they face impossible pressures.
Will they risk their career and their department’s resources to demand costly compliance fixes? Can they honestly report data breaches when doing so might undermine the very projects they oversee?
Regulators now probe DPO contracts, reporting lines, budget allocations and performance metrics to ensure that no hidden incentives undermine objective oversight. This stems from the role of the DPO itself.
Although their duties do not stop strictly here, DPO has at least the obligation to:
These obligations are highly complex and narrowly specialized, meaning that the DPO must be a qualified professional who takes special care of the risk related to processing actions, taking into account the nature, scope, circumstances, and purposes of processing.
Controllers and processors must guarantee that their DPO can carry out GDPR duties without any competing interests. While a DPO may hold other roles, those responsibilities must never compromise their ability to advise on compliance, monitor processing activities or report breaches impartially.
In reality an internally appointed DPO often lacks the organizational clout, dedicated budget and unfettered access to senior management needed to resist commercial or political pressure. When you ask the same person to both set data‐processing policies and police them, you invite bias or outright conflict undermining the very safeguards GDPR was designed to enforce.
A conflicted DPO not only risks regulatory breaches but can quietly erode your entire data-protection framework. When the same person downplays risks to protect their projects, DPIAs become mere formalities rather than honest assessments, and breach reports may be delayed or diluted to avoid ruffling feathers. Employees lose trust, fearing the DPO is more “management’s enforcer” than a neutral advisor, which suppresses problem-spotting and honest dialogue. Boards, deprived of clear, unvarnished reporting, can’t gauge true compliance health and may unknowingly expose themselves to personal liability for governance failures.
Internal vs. External DPOs
Outsourcing the role to an external expert sidesteps these pitfalls entirely. An independent DPO brings undivided loyalty to data-protection mandates, proven methodologies and a direct reporting channel to your board. Beyond mere regulatory compliance, this model builds client and partner trust, shields you from costly fines and reputational fallout, and positions your organization to respond nimbly to evolving privacy challenges. Therefore, an external DPO offers:
- Unquestioned objectivity, accountable solely to data-protection mandates
- Cross-sector expertise and access to best practices
- Flexible engagement models, avoiding full-time salary commitments
- Rapid deployment, leveraging prebuilt templates and methodologies
- Continuity of coverage, with partner firms filling in during absences.
So, what are the practical Steps to Ensure Independence Today?
1.Audit your DPO arrangement: Verify that your DPO holds no decision-making authority over processing, enjoys a dedicated budget and working time.
2. Consider outsourcing: Organizations must avoid assigning DPOs tasks that could lead to conflicts of interest and should formalize their independence within the organizational structure. If an internal appointment cannot satisfy these criteria, engage an external DPO who can bring true independence – and with it, the confidence that you’ll satisfy regulators.
3. Provide Ongoing Training: Regular training should be offered to DPOs to maintain and enhance their expertise in data protection.
4. Facilitate Direct Reporting: DPOs should report directly to the highest management level to ensure their concerns and advice are appropriately considered.
Conflict of interest isn’t just a technical breach of GDPR Article 38(6). It corrodes the very fabric of an organization’s privacy culture, weakens controls at every level, and magnifies both financial and reputational risks. Ensuring genuine DPO independence is therefore non-negotiable if you want your data-protection program to be both credible and resilient.
