Small businesses owners have been warned they could be fined up to £500,000 in the event of a data security breach as new powers for the Information Commissioner's Office (ICO) come into force today.

The ICO can now fine businesses up to £500,000, equivalent to 10% of the highest annual turnover of a small company, if they lose individuals' confidential data.

Previously the ICO had the power to fine just £5,000 for serious breaches of the Data Protection Act. These new measures are expected to act as an effective deterrent to improve data security within the UK.

"With fraud on the rise, information security is more important than ever for businesses looking to protect their financial standing and corporate reputation. These new measures highlight the urgent need for small businesses to invest in data security practices that protect their employees' and clients' confidential information," said Robert Guice, of information destruction company Shred-it.