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Information Commissioner Christopher Graham: ''The penalties...aren't strong enough to stop it''

Staff at mobile phone company T-Mobile passed on millions of records from thousands of customers, a spokesman for the firm has confirmed.

The suspected illegal trade emerged after the firm alerted Christopher Graham, of the information watchdog.

He said brokers bought the data and sold it on to other phone firms, who then cold-called the customers, as their contracts were due to expire.

A T-Mobile spokesman said the data was sold "without our knowledge".

Information Commissioner Mr Graham, appointed earlier this year, said the case he was now preparing illustrated why there needed to be a prison sentence to prevent people from selling private data to third parties.

Search warrants

Earlier, Mr Graham had said he would not name the operator involved as it could prejudice a prosecution.

But after 02, Vodafone, Orange, 3 and Virgin said they were not the subject of the investigation, T-Mobile confirmed it had been.

Mr Graham told the BBC that investigators had been working with the company after it reported suspicions of an unlawful trade in customers' data.

The team from the Information Commissioner's office obtained search warrants to enter premises and have also interviewed employees.

Mr Graham said: "Many people will have wondered why and how they are being contacted by someone they do not know just before their existing phone contract is about to expire.

"We are considering the evidence with a view to prosecuting those responsible and I am keen to go much further and close down the entire unlawful industry in personal data.

"But, we will only be able to do this if blaggers and others who trade in personal data face the threat of a prison sentence.

"The existing paltry fines… are simply not enough to deter people from engaging in this lucrative criminal activity. The threat of jail, not fines, will prove a stronger deterrent."

The Ministry of Justice has been consulting on tougher penalties for illegal trade in personal information.

The Data Protection Act bans the selling on of data without prior permission from the customer and a fine of £5,000 can be imposed following a successful prosecution.

But Mr Graham said that the mobile phone case suggested that people were "driving a coach and horses" through the legislation.

"More and more personal information is being collected and held by government, public authorities and businesses," said Mr Graham.

"In the future, as new systems are developed and there is more and more interconnection of these systems, the risks of unlawful obtaining and disclosure become even greater.

"If public trust and confidence in the proper handling of personal information, whether by government or by others, is to be maintained effective sanctions are essential."

'Proactively supported'

A spokesman for the company said the sale of the data had been "deeply regrettable" and that it had been asked to keep it secret to avoid any criminal prosecutions being prejudiced.

He said: "T-Mobile takes the protection of customer information seriously.

"When it became apparent that contract renewal information was being passed on to third parties without our knowledge, we alerted the Information Commissioner's Office.

The spokesman added that the company and the ICO "working together" had identified the source of the breach and that T-Mobile had "proactively supported the ICO to help stamp out what is a problem for the whole industry".

He added: "We were therefore surprised at the way in which these statements were made to the BBC today."