Private Investigators

Written evidence submitted by G4S [PI02]

Introduction

G4S welcomes the opportunity or respond to the Home Affairs Select Committee’s inquiry into the regulation of private investigators

G4S is the world's leading security solutions group, which specialises in outsourcing of business processes in sectors where security and safety risks are considered a strategic threat. G4S has operations in more than 120 countries and more than 625,000 employees.

The Cotswold Group, which is owned by G4S and will be renamed G4S Investigation Services in April 2012, is the largest provider of surveillance and investigative services to insurance clients within the UK, with a strong emphasis on personal injury fraud. It provides a range of surveillance and investigation services in property, motor and personal injury insurance claims, employers and public liability, employee screening, housing benefit fraud and corporate investigations. The business, which has been operating for over 20 years and currently employs over 350 investigators, works for 30 major UK insurer companies.

This inquiry is very timely and provides an important opportunity to fundamentally rethink of how the private investigation industry is delivered and regulated. We have been strongly supportive of a self-regulatory framework for twenty years and believe the time is right for a new and more robust initiative.

We believe any regulation, however it is managed, needs to cover off the following key areas:

§ Standards of behaviour for companies and individuals operating in the industry;

§ Screening and vetting of personnel and sub-contractors to ensure disreputable individuals are deterred from joining the industry;

§ Training and accreditation of personnel, which needs to be sufficient to ensure their standards of behaviour and performance are reasonable and easily assessable;

§ Incident reporting and management are sufficient to allow investigation by independent organisations, whether Government or industry appointed;

§ Grievance procedures, to ensure those who have issues with individuals or providers have the ability to pursue reasonable grievances;

§ Compliance and enforcement mechanisms to ensure the areas above are followed by those operating within the industry.

We believe there are a number of a good models for the development of this framework:

§ Industry self-regulation: This is the model being backed by the Foreign & Commonwealth Office for the regulation of the private security companies operating in complex environments. In this model an industry led organisation, A|D|S’s Security in Complex Environments Group, provides the focus for industry self-regulation with FCO support and guidance. For the private investigation industry the proposed Chartered Institute of Investigators or Association of British Investigators might provide an obvious focal point for this model, with support from the Home Office.

§ Statutory regulation. Encouraging the restructured Security Industry Authority (SIA), as the Government-backed organisation responsible for regulating the private security industry in the UK, to increase its scope to cover all companies involved in clearly agreed private investigation services, and through them all individuals. As such the Government would be able to benefit from the SIA’s existing regulatory regime as well as an extensive compliance and enforcement structure. However, the SIA is currently transitioning to a new structure and widening its scope of responsibility would require primary legislation.

We believe that due to the structure of the industry any future regulatory and compliance framework needs to be focused on the individual, rather than companies. This focus would ensure undesirables have no ability to operate anywhere within the market while ensuring the qualified have ease of movement between companies.

We believe regulation, in whatever form it takes, is essential to the future of the industry, those operating within it and those who come into contact with it as customers or investigated. We also believe that for regulation to be credible, within and without the industry, it needs to have a Government-backed or independent partner which has robust compliance and enforcement powers to ensure that those who do not abide by regulation are not able to operate. This will ensure that companies and individuals which bide by the rules are able to highlight the fact to existing and potential customers.

We also believe it is critical that any future regulatory or licensing framework has customer backing, as with the UK security industry, so the framework creates a legitimate commercial advantage for those who undertake the accreditation required. This accreditation process should not be so onerous it is impossible for Small and Medium Sized Enterprises (SMEs) or individuals to satisfy without significant investments of money, time or people but should be robust enough to properly deter the unethical or corrupt.

We have replied to the specific questions raised by the Committee where G4S’s experience is most relevant.

Market summary

Issues

Fraud is a huge issue for all members of society, with insurance fraud estimated to be a £1.9 billion problem by the Insurance Fraud Bureau while the Department of Work & Pensions estimates illegitimate benefit payments cost the taxpayer around £5.2bn a year, almost 3% of the total welfare bill.

Range of providers

FSA regulations in 2005 placed an emphasis on insurers to investigate fraud and which lead to the setting up of the Insurance Fraud Bureau (IFB), which is paid for by Insurers to assist intelligence delivery. This development, along with insurers’ desire to focus on their core business, has led to the growing trend for insurers to outsource claims process and handling to trusted businesses.

However, insurance work only covers a proportion of the potential market which can range from matrimonial investigation services to employee screening and company due diligence. Little of this is registered or monitored by any authority, beyond a variety of different organisations, none of which uses the same criteria as each other, such as: from the Association of British Investigators (ABI), which is a fee paying organisation where a short exam is required prior to joining; the Institute of Professional Investigators (IPI), which is also a fee paying organisation but with no exam required; to The Institute of Professional Investigators. Therefore there now countless companies and individuals offering a range of services, loosely covered by the term "private investigation".

Personnel issues

In our experience private investigators (PIs) come from a number of backgrounds:

§ Former police officers;

§ Former military personnel;

§ Anywhere else.

It is this last community which causes the issue: essentially someone can be a butcher today and a private investigator tomorrow without any proper checks: and sadly a number of those will be looking to take advantage of vulnerable people, often in a state of distress and who are prepared to hand over large sums of money to obtain information which they believe will provide them with the evidence they require for a release from uncertainty.

We believe the industry is currently in an "iceberg" stage with a small percentage of self regulated and reputable businesses providing public assurance to a large number of others, both companies and individuals, who are operating without any proper regulation: this introduces the significant risk of people entering the industry for the wrong reasons and with few safeguards to stop them from doing so. Essentially this makes the PI industry very similar to that of the security industry prior to the introduction of the Private Security Industry Act (PSIA) in July 2001, which made it a criminal offence to work in the security industry without an SIA licence or contract with a company which does not employ licensed officers.

There is currently no statutory or industry-led procedures to ensure that only those with the right skills, standards of behaviour and ethical standards may operate individually or set up companies offering the types of services identified above.

Lack of integrity amongst some customers

The other key issue is driven by customers, from large corporate to private individuals, who request information which is not readily or legally available but for which they are prepared to pay large sums of money, often in cash. This has created widespread bad practice amongst those PIs, whether corporate or individual, for whom basic business ethics are anathema. The issues raised by this behaviour have become clear over the last few months but does not need to be revisited in this response.

Private investigators are often seen as the ‘go to’ people if a person or organisation wants information which is not in the public domain, including:

§ bank account details

§ telephone history

§ banking or tax information

§ previous convictions

§ medical history (incl doctors’ records)

§ covert cameras

Clearly these are offences under the law but yet are provided on a daily basis by unscrupulous individuals who perceive it as a way to make money: indeed, some investigators still advertise these as services or are at least willing to partake in them without too much persuasion.

It is also estimated by the ABI that 90% of PIs turnovers less than £50,000 in revenue each year which, if this market data is correct, suggests the majority operate in the "black" economy. Irrespective of regulation and licensing this issue will likely continue exist, however they will make those engaged in these practices think twice before they do so.

Why regulation not already introduced

G4S believes the previous round of regulation and licensing discussions ran out of steam for a number of reasons:

§ Funding – there was a lack of clarity about who would pay for the regulatory body and whether companies or individuals would be charged. There was also confusion about which companies would have to pay and which wouldn’t: so investigations specialist were expected to pay but lawyers and loss adjusters, who might be investigating the same cases, would have hidden behind their professional qualifications and not had to pay anything.

§ Lack of leadership of those leading the discussions, which meant those discussion they lacked direction.

§ Lack of proper interaction between Government and industry so the industry’s leading companies were not consulted on what would or would not look achievable or rational.

§ Lack of understanding of grass roots investigation activities which meant there was little detailed discussion of the specific issues or the nuances amongst those leading the consultation.

Response on the case for regulation

We believe no effective case has, as yet, been made for regulation and so earlier attempts at its implementation have been at best ‘half hearted’. We have been told by clients that our model of fully employing our investigators, using robust screening and vetting procedures, sets us apart in the marketplace: this is obviously positive for our business but cannot be healthy for the wider industry in terms of perception or performance.

We believe regulation, in whatever form it takes, is essential to the future of the industry, those operating within it and those who come into contact with it as customers or investigated. We also believe that for regulation to be credible, within and without the industry, it needs to have a Government-backed or independent partner which has robust compliance and enforcement powers to ensure that those who do not abide by regulation are not able to operate. This will ensure that companies which bide by the rules are able to highlight the fact to existing and potential customers, but that those who do not are disadvantaged.

Response on compulsory licensing

It is important licensing takes place as part of regulation and we believe that it should be delivered on an individual basis to deter the disreputable from joining the industry.

We believe it will be up to the chosen regulatory body to determine the fees applicable to licensing and the training required to establish competency criteria. However, the training and associated licensing costs should not be such that they deter new joiners to the industry or prove financially insurmountable for those with an existing workforce which needs to be registered.

On the training issue we believe there needs to be a Government/industry approved training programme which new joiners to the industry would have to undergo. This training should be a mix of theory and practical based training and should be long enough to provide stakeholders with comfort that participants have reached a minimum level of performance. This training should conclude with robust testing before accreditation or licensing is approved.

We believe using a "grandfathering" approach for those individuals with a proven track record could be a useful way to counter the latter issue – essentially allowing those with more than a certain time served in the profession to take an exam or practical test, rather than carry out specific training, to achieve their accreditation.

The likely cost of regulation

We believe the cost of regulation, licensing and any associated accreditation and training has got to be in line with the current economic conditions. If costing is prohibitive then only the larger companies, who will have already invested significantly in their systems and procedures, will bother to pay. It will also ensure that the SME community will be unlikely to be able to pay for of licensing, but that the less reputable companies will not bother.

January 2012