Thanks karma. But you're right, data protection laws do prohibit it, yes, so we're no further forward really. You are still, I think, saying that because parents feel themselves to be consumers they are entitled to be treated as such - but I still don't get how that would work in practice. Parents' feelings about being assessed financially in relation to their children's education are a matter for them to take up with the govt. They have no bearing whatsoever on the student's relationship with their university. I understand why a parent might feel that they should. But they don't!
To answer your question 'where's the harm?' I'd say two things. First, where's the benefit? Honestly, how could talking about any aspect of an adult's life and work TO THEIR PARENTS be better than talking to that adult directly? (I would make exceptions for medical professionals discussing cases of serious illness, where the sick person might not be capable of taking part in the conversation themselves).
Secondly, I don't think such conversations would necessarily be harmless. Assuming we are talking about students - people who have actually become undergraduates - then the harm is in perpetuating the infantilisation of that 18 year old. In endorsing their parents' view that the child should be treated as dependent and they should have some control over their life. In allowing the child to continue to think that they don't have to take responsibility for themselves. These things are harmful to a young adult's growth towards autonomy, IMO - a process which, as university lecturers, most of us see ourselves as trying to enable. Not to delay it by treating our students as if they are still schoolkids who can legitimately be reported on to their parents.
This is of course setting aside the obvious point that the power dynamics of many dysfunctional and abusive families would make it very difficult, even impossible, for the most vulnerable students to say that the uni should not communicate with their parents. I appreciate that this might be hard for a concerned, supportive parent to hear, but unfortunately there are many students for whom university is a refuge from a very difficult homelife. And for me, protecting that is a higher priority than reporting to parents on their adult student child's progress.