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Jail threat over unscrupulous surveillance of customers

Lenders and insurers have been warned they may face imprisonment if they use unscrupulous practices to gain information on clients.

The Information Commissioner’s Office claims it has found evidence that insurers use private detectives and other unscrupulous means to source information on clients they believe could be making fraudulent claims. Some lenders have been accused of using similar practices to trace debtors.

It is calling for the Data Protection Act to be amended to include a maximum penalty of two years imprisonment for such an offence.

The ICO has written to a number of trade bodies including the Association of British Insurers, British Bankers’ Association, as well as the FSA, to gauge their views and ensure that members and regulated firms comply with the DPA.

Its report states: “A number of large, well known lenders are outsourcing debtor tracing to private investigating agencies who are less than scrupulous.”

The ABI insists that private detectives are required in severe cases, such as when someone claiming injury under an income protection policy is found playing sport.

Spokesman Malcolm Tarling says: “We reserve the right to use private investigators and surveillance where necessary if fraud is suspected.”

Council of Mortgage Lenders spokesman Bernard Clarke says: “There is no evidence of widespread problems from mortgage lenders but we have alerted all our members.”

FSA spokeswoman Eleanor Hughes says: “Regulated firms are expected to abide by other laws as well as FSA regulations.”


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