The European Commission needs to take its proposed Data Protection Directive "back to the drawing board", according to a UK parliamentary committee which has voiced concerned with the draft document.
The Justice Committee issued its report on the draft directive on Thursday and said that it believes the proposed framework is too drastic.
"We agree with the Information Commissioner's assessment that the system set out in the draft regulation 'cannot work' and is 'a regime which no one will pay for'," said committee chairman Alan Beith.
"Therefore, we believe that the Commission needs to go back to the drawing board and devise a regime which is much less prescriptive."
In particular, the committee had concerns that many of the requirements put forward were too rigid.
"The processes and procedures that are specified within the proposals do not allow for flexibility or discretion for businesses or other organisations which hold personal data, or for data protection authorities," the report added.
It was also concerned that the new directive could hamper law enforcement agencies.
"We have been told that the draft directive does not apply to domestic processing by law enforcement agencies within the UK. This needs to be placed beyond doubt," said Beith.
"Additionally, it needs to be made clear that the directive must not impact on the ability of the police to use common law powers to pass on information in the interests of crime prevention and public protection."
However, the committee did praise some elements of the proposal, citing the benefits of having a single data protection regime across Europe as a major benefit to UK businesses.
"Currently a firm would have to deal with 27 separate sets of domestic legislation, and may be put off by the potential legal costs of complying with each," Beith said.
"Whilst multinationals can take on this burden, small firms cannot. If the draft regulation is passed, this worry will be removed, as the law in Romania will be the same as in Sweden, and indeed within the UK itself," he added.
The EC said it welcomed the UK's response and focused on the positive aspects of the proposal that it had recognised.
"In supporting the choice of a data protection Regulation (see point 30) the UK recognises that companies and citizens will best benefit from uniform and strong data protection rules which apply equally throughout the entire EU," it added.
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