Private Investigators

Written evidence submitted by Bishop International [PI13]

Executive Summary

As chief executive of a corporate investigations business that has operated from London for more than 20 years, I am, in principle, in favour of licensing private investigators.

However, some of the requirements set out by the Home Office in its response to the Partial Regulatory Impact Assessment in 2007 were, in my opinion, misguided and mismatched to the realities of the sector. The ill-conceived nature of the legislation and the resulting difficulties of implementation may have stalled licensing.

The legislation and suggested regulation do not take into account the range of constituents in the industry, their very different clients, services, levels of organisation and variety of backgrounds. It suffers from a one-size-fits-all approach. There are three main areas which require amendment if the legislation is to work to the benefit of the public, the sector and the regulator.

The first area of concern is the requirement to license anyone working to obtain information "about the activities of a particular person." The requirement threatens the use of specialists employed on a freelance basis and, therefore, should be reconsidered. The second area of concern is the requirement for a public register of investigators. It threatens the safety of investigators, particularly those working on issues related to organised crime.

The third area of concern is the assertion that a "competency requirement" would protect the public from possible harm, a claim which I believe to be unfounded and which would impose an unreasonable and unproductive burden upon investigation businesses.

Memorandum

Rationale for Regulation

In 2007 the Home Office maintained that "the only current mitigation against the potential harm caused by unethical individuals or companies" is being reported to the police or to the Information Commissioner. It went on to say that "neither prevents an individual from operating within either sector to begin with." The implication is that "unethical" people should be prevented from entering the sector. That is no more possible than it would be for any other sector. What is possible is to prevent people with criminal records from entering the sector.

The Home Office recognised that "the full scale of any potential harm caused by individuals or companies operating unlawfully or unethically within the private investigation or precognition sector is not known" and that "there is no ready source of quantitative information." The recent phone hacking scandals have given cause for concern. However, to the best of my knowledge, only four people who have styled themselves as private investigators have figured in the inquiries to date and only one has been arrested. While others may come to notice whose behaviour would be deemed unacceptable, they are unlikely to represent a significant proportion of the sector. It does not seem rational to create an expensive regulatory burden for an entire sector because of the ill-considered or illegal activities of a handful of people.

In the one table of statistics presented by the Home Office in 2007 which recorded confirmed or suspected breaches of Data Protection laws, the figures were unimpressive: 23 investigators under investigation, 4 considered for prosecution, 6 considered for cautions and 6 for undertakings and 7 actively being investigated. As of 2007, formal action taken against investigators since the 1998 Data Protection Act included 14 prosecutions, 1 caution and 4 undertakings. To put that into context, the Security Industry Authority estimated that there may be as many as 10,000 investigators in the UK. The numbers of suspected and confirmed breaches do not seem to justify the full weight of a complex regulatory system.

In 2007 the Home Office pointed out that there is not "a uniform or consistent approach by employers for vetting (either in terms of competence or probity) private investigators." If it became possible for investigation companies to learn whether a prospective UK employee or contractor has a criminal record, it would answer, as far as possible, the question of probity. The issue of competency is dealt with below.

The Licensing Requirement

The broad scope of the Home Office licensing requirements for the private investigation sector does not take into consideration aspects of investigations at the corporate level. The stated requirement is for anyone to be licensed if they are obtaining information "about the activities" of a particular person. That, however, conflicts with the requirements within the corporate world for effective due diligence. Corporate investigation companies inevitably need to go outside the traditional investigative world to employ people with esoteric knowledge.

Such inquiries often relate to a significant transaction in the City of London. In such circumstances, we employ people on a freelance basis who have an intimate understanding of a business sector or community. Investigations that require socioeconomic or other technical knowledge may require the expertise of an academic. Such people are not investigators by vocation. They are consultants taking on a one-off assignment. Investigative work is not the substance of their livelihood. They will not have any interest in being licensed as investigators and there should not be any requirement for them to do so.

This is not a negligible issue. If the sector is unable to employ such people on a freelance basis our corporate clients, including listed companies, financial institutions and law firms, will lose the ability to learn what they need to know, either in advance of a transaction or when trying to recover from a civil or criminal loss. It would be a crippling blow to an otherwise well-used and highly effective service that accomplishes what the Security Industry Authority says it wants to achieve-"protection of the public."

I would suggest that such people employed on a freelance basis should be considered to be conducting an activity which is "incidental" to their normal work and therefore exempt from the licensing requirement. Furthermore, investigation company directors should be licensed to decide who may qualify for exempt status on the grounds of carrying out an activity which is "incidental" to their day-to-day activities.

License Register and Identification

There should not be a public register of licensed investigators. Nor, as the Home Office suggested, should there be a requirement for the license to be carried and produced on request.

It appears that the Home Office was uninformed about the nature of investigations, particularly those carried out in connection with organised crime. For purposes of such investigations it is often necessary to pose as something other than an investigator.

If, in those circumstances, someone was found to be carrying such identification they could be in danger of losing life or limb. The suggestion illustrates a gross ignorance of the nature of investigative work.

The Competency Requirement

I have a strong objection to the implementation of competency criteria as outlined by the Home Office. The specific requirements as defined in the Security Industry Authority’s October 2006 document "Private Investigator Best Practice" are so rudimentary and wide-ranging as to be practically meaningless. It is a list of many administrative tasks, general observations about the need to understand relevant law, advice on how to interview people and gather evidence, how to carry out surveillance and suggested standards of behaviour.

Given that, by the SIA’s own admission, the vast majority of people who enter the investigative trade come from related areas of work (police, customs, intelligence and security services, military security or intelligence, journalism, the law, etc.), it seems senseless to have people who have spent years in such endeavours "taught" those skills by people who may have no more-and possibly less-competence than they have. It is more galling that they would have to pay for such instruction and assessment.

Individuals tend to find their own place in the market. A career in police surveillance does not necessarily qualify someone to understand an international fraud. Conversely, a career in the Crown Prosecution Service does not qualify someone to understand the practicalities of surveillance. However, both career paths may enable an individual to work productively as an investigator. The range of activities is so wide as to make any single competency course impossible as well as unnecessary.

The Home Office asserted in 2007 that to impose licensing without competency requirements "would not effectively address the risk posed to the public," when in fact the only risks identified in its public documents were the 14 prosecutions for breaches of the Data Protection Act. If each of those offences had been committed by a separate investigator-taking into consideration the SIA’s estimate of 10,000 investigators in the UK-the percentage of offenders in the licensed population would be .0014%. That hardly justifies the imposition of a competency regime and its associated costs.

The suggestion that licensing without competency requirements would not address "the harm" of unlawful or unethical practices by "rogue elements" within the sector is nonsense. It implies that the converse is true, i.e. that competency requirements would "greatly reduce the likelihood of harm through unlawful behaviour." There is no evidence whatsoever for that assertion. People with criminal intentions do not generally object to paying for a course if it gives them the legitimacy to carry on illegal practices.

A reasonable argument can be made for testing an understanding of the law as it applies to investigations. The Highway Code is a good example of how to educate people in order to test their knowledge of relevant law. There is no reason why a similar system cannot be adopted to test investigators on their knowledge of law relevant to their work. From the regulator’s view it would be cheaper to administer and from the licensee’s point of view cheaper and easier to use.

New entrants to the investigations trade who do not come from a relevant background should be required to find an apprenticeship with an investigation company. Their first year of employment should require a provisional license (which would amount to a criminal record check) and, with the endorsement of their employer, they should be entitled to apply for a full license one year from the start of their apprenticeship.

The Home Office Preferred Alternative

The assertion by the Home Office in 2007 that the SIA concluded that its "research" had "demonstrated support for a formal training route" is belied by the fact that its conclusion was based at least partly on responses from "a range of education and training bodies." It is hardly surprising that education and training bodies would welcome the prospect of a whole new sector for training.

As the Home Office pointed out at the time, "it will not be possible to assure 100% compliance with licensing, and there will always be elements of unlawful or unethical practices." That statement is incontrovertible. What is not true is the assertion that "competency requirements reduce that risk." This is the crux of the issue. Competency bears no relation whatever to honesty or ethical behaviour. Harold Shipman, the doctor who murdered at least 250 of his patients was-until caught-regarded as a highly "competent" medical practitioner. Albert Einstein, who failed a high school examination, and might therefore have been thought of as academically incompetent, became one of the greatest physicists of the 20th century and wrote extensively on the ethical responsibilities of science. Competency has nothing to do with how people behave. Cost and Impact of Options

In 2007 the Home Office estimated that the "typical learning route" for a company employing ten investigators would cost £9,000, which would be in addition to the licensing fees. That would be followed by on-going "refresher training." Including loss of earnings, the costs for a 10-person company was estimated as £11,450 initially with periodic additional costs of £7,390. The figures would be likely to be considerably higher today.

If one accepts that competency requirements have no benefit, i.e. they will not have any significant impact on "harm" to the public, analysis of the proposed costs becomes irrelevant. No fees, no matter how great or how small, will protect the public or other interested parties from illegal or unethical behaviour. Since that is the stated purpose of the "competency requirement," imposing such costs on investigators and investigation companies is an unreasonable burden.

The absurdity of the competency requirement becomes even more obvious when one considers the Home Office’s observations about "European Issues." If an investigator from another EU country were to come to the UK to carry out an investigation he or she could legally do so "without being subject to any prior check." In other words, a resident of another EU country could arrive in the UK to carry out an investigation without any criminal record check and with no consideration given to the "harm" that person might cause, while people who have established track records in the UK would be required to meet so-called competency requirements at considerable cost.

Competition Assessment

The Home Office’s 2007 assessment of the investigation market missed an important point. It is not simply a question of whether the UK sector will suffer because of the proposed regulations. The bigger issue is whether corporations, financial institutions and law firms that depend upon UK companies to undertake investigative work will find that they cannot get the service they need.

During the last 25 years the UK has built a sophisticated corporate investigations sector that services companies around the world. There may be as many as 20 companies in the UK that undertake investigations at a corporate level. It is likely that the sector is worth more than £100 million to the nation’s income. If the regulatory framework in the UK becomes too onerous or cumbersome, the business will migrate to more amenable jurisdictions.

The Home Office’s assertion in 2007 that "it is not believed that regulation will significantly limit the ability of suppliers to compete" is true enough within the UK market. However, the real competition is for the £100 million worth of business in the international corporate market. It is that business which will suffer if the proposed regulatory scheme is not reconsidered. Moreover, the ability of the business and legal community to make best use of a highly specialised service would be severely hampered.

Conclusion

A licensing regime for investigators under the aegis of the Security Industry Authority would make sense providing it operates in a relatively simple and economic manner. It should include a criminal record check that would eliminate known criminals from the investigation trade. It should also include a written test not unlike that for a driver’s license to ensure that investigators are aware of applicable law. The costs associated with such a regime would be acceptable to most people in the sector and would, in so far as it is reasonably possible, protect the public from harm.

January 2012