Some firms are leaving customers' details liable for ID theft and are 'still not taking the risks seriously', according to the Financial Services Authority (FSA).

The financial watchdog says that while some companies are doing their best to combat this kind of fraud, smaller firms are not always following best practice.

Many financial companies do not properly vet their employees and a number of smaller firms were reliant on compliance consultants who were not aware of the importance of data security.

Some firms were simply 'not recognising' the potential value of their data to fraudsters, it says.

Director of the FSA's financial crime and intelligence division Philip Robinson believes customers should be able to expect their confidential information to be protected.

He adds that the FSA will 'not hesitate to take action' if necessary in future.

The FSA is an independent non-statutory authority which regulates the financial services industries.