Phone-hacking is merely the tip of the iceberg of a substantial black market in personal information, MPs have said.
A year after the Milly Dowler phone hacking scandal hit the headlines, the ease that private investigators are using tracking and recording devices has been emphasised by the Commons Home Affairs Select Committee.
Despite the public outcry after it revealed that Sunday tabloid News Of The World had illegally hacked into the phone of missing 13-year-old, the report published on Friday insists that rogue investigators are still cashing in on people's private lives and escaping with paltry fines.
The report calls upon Home Secretary Theresa May to strengthen the penalties available for offences relating to the unlawful obtaining, disclosure and selling of personal data, the MPs said.
"The current fine - typically around £100 - is derisory," the committee said.
"It is simply not an effective deterrent."
In spite of the arrests, inquiry and media furore that followed the phone hacking scandal, MPs have insisted that devices are easily available online and a robust licensing and registration system for private investigators should be set up as soon as possible.
The government must act to sever the links between private investigators and the police, the MPs added.
"Personal data is easier than ever to access and a private profile of a person can be built from a desktop," their report into private investigators said.
"The ease of access has also opened the information market to new and unscrupulous suppliers, who may not be registered with the Information Commissioner and are unlikely to understand the rules under which they ought to operate.
"Phone-hacking appears to be the tip of the iceberg of a substantial black market in personal information."
Keith Vaz, the committee's chairman, added: "We have found that rogue private investigators are the brokers in a black market in information.
"They illegally snoop on our data, cash in on our private lives and only get away with a paltry fine.
"The public must be assured that those acting as 'private investigators' are subject to stringent checks, act under a code of conduct, and will face tough penalties if they step out of line."
The committee also called for the government to sever the links between police forces and private investigators, with both parties having to formally record any contact.
There should also be a one-year cooling-off period between retirement from the police force and working in private investigation, the committee said.
Vaz added: "It is time this industry was regulated, so that the honest majority can get on with their work. We expect the Government to act urgently."
The MPs said they heard "troubling allegations" that investigators were maintaining close links with officers in order to "garner 'premium' information that commands the highest prices".
"These links appear to go beyond one-off contacts and therefore to constitute an unacknowledged, but deep-rooted intertwining of a private and unregulated industry with our police forces," they said.
The committee called for the police watchdog, the Independent Police Complaints Commission (IPCC), to take direct control over investigations in cases alleging police corruption.