FAILURE to comply with the new Data Protection Act could get costly for Bolton companies.

A transition period for the new Act ended this week and businesses which fail to meet the more stringent requirements will face fines of up to £5,000 in magistrates courts with unlimited fines for offences tried in a higher court.

Rod Sellers, president of the Manchester Society of Chartered Accountants, said one of the more important changes covers "relevant manual filing systems" as opposed to just computer-based records. "In general, any structured filing system could well fall within the scope of the Act and many smaller firms could be in danger of being caught out," he said.

"Data controllers must safeguard personal information against unlawful use and damage even when it's being processed by a third party.

"In reality, this now means that appropriate written contracts are required for external service companies". New rights give individuals greater access to data held about them, and about how it is stored and used. Mr Sellers said many businesses would need to carry out a thorough information audit.

More onerous rules apply to sensitive personal data, such as politics, religion, sexuality and race, which is a particular issue for many organisations in the not-for-profit sector. Contact the Institute of Chartered Accountants' website at www.icaew.co.uk or the Information Commissioners at www.dataprotection.gov.uk