National Identity Fraud Prevention Week kicked off in the UK today, warning British firms of the dangers of ID fraud to them, their customers, partners and suppliers.

New research commissioned by the National Fraud Authority found that a third of small to medium sized companies have been hit by ID fraud, and that only three per cent of consumers are confident that the companies they deal with handle their details securely.

Around 71 per cent of UK employees believe that their companies should do more to ensure that confidential documents are handled responsibly, despite the well-known risks of financial loss and reputation damage.

According to the research, only two-thirds of firms have put in place a clear policy on how to handle sensitive documents, while around a third of employees admit to throwing these documents straight into the bin.

Chris McIntosh, chief executive of encryption firm Stonewood Group, argued that stricter enforcement of the Data Protection Act is the only way to ensure firms handle sensitive information with greater care.

"Until people are taken to court and imprisoned then ID fraud will continue to escalate - we need to see sturdy laws but also the correct enforcement," he added.

"Four or five years ago you could say only military and government encrypted data but that excuse doesn't exist anymore; solutions are cheap and easy to install."

National Identity Fraud Prevention Week partners, including the Metropolitan Police, the Federation for Small Business and CIFAS, have published a 28-page guide designed to give businesses advice on data protection and how to deal with a breach.