The Financial Conduct Authority has stated that "there is no consistency" in the way insurance companies use private investigators (PI).
The regulator announced in March 2013 that it would begin speaking to the insurance industry about how firms used PIs.
And commenting on its findings, Simon Green, the FCA's head of general insurance, said: "When we started this piece of work we were keen to explore whether or not insurance companies had appropriate oversight when using external private investigators.
"What we found is that 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, the activities they perform and the levels of due diligence conducted.
He added: "If we are to build greater trust and confidence in the insurance market, insurers must take their responsibilities seriously. We expect all insurance companies that use private investigators to read and understand the fact sheet, and contact us if they are unsure of anything or have concerns."
