Organized crime gangs are planting staff in financial institutions, a new report shows. The report, conducted by the Financial Services Authority (FSA), details how groups deliberately target banks, investment firms and insurance companies in order to commit identity theft.

The report found that most financial organizations, particularly the small and medium sized companies, were failing to obseve basic good secuirty practices.

In particular, it found, a lack of appropriate vetting, inconsistencies in recruitment and insufficient understanding of security risks were making the job of the criminal easier.

"Hackers and fraudsters are refining and improving their techniques as we speak," said Phillip Robinson, the FSA's financial crime sector leader. "In the fight against fraud, firms will have to run to stand still if they are to protect their assets and those of their customers."

The FSA visited 18 small to large UK companies to conduct the survey. It highlights lack of technical expertise, poor staff training and the dangers of outsourcing as further areas the industry needs to tackle.