The Financial Conduct Authority has warned that insurance firm managers are unaware of just how many investigations are being conducted by private investigators (PIs) in their name.
According to the FCA, 60 per cent of insurers the watchdog questioned had no contracts with PIs.
It has been looking into the issue of how insurance companies use PIs – uncovering that of the ten firms questioned, eight conducted either limited or no external checks on the appropriateness and quality of the work that they do.
The latest focus on the issue began in March, when the regulator contacted insurers to find out what their use of PIs extends to.
FCA general insurance head Simon Green said: “Whilst the majority of firms involved recognise the potential reputational risks to the industry from the use of private investigators, there is no consistency in the way private investigators are used.”
He added that the regulator has now released a fact sheet for insurance companies that do use PIs to read and has asked any insurers who are unsure of anything in the information provided to contact them with their concerns.