Over the last four years the Security Industry Authority has revoked or suspended over 2,500 licenses.
Panorama: Britain's Protection Racket, BBC One 8.30pm Monday 21 January 2008
The legislation creating the SIA, with its 120-strong team was designed to prevent serious criminals from owning security firms.
But what the legislation doesn't do is prevent those same serious criminals from becoming "security consultants".
Michael Wilson, Chief Executive of the Security Industry Authority, told Panorama the security industry was a good industry with 'a few bad eggs' that would be weeded out.
But he said the SIA could not act against anyone simply because they were a security consultant.
"If he's just calling himself a security consultant, and doing nothing, then we won't touch him.
"We can't touch him because he's not carrying out a licensable activity.
"If he can be shown to be involved in licensable activities, then we can touch him.
"I don't see it as a loophole if somebody is genuinely acting as a consultant, then their background may concern us, but it's not technically a problem unless they have a hands-on influence in that company."
Approved Contractor Status
Panorama asked Mr Wilson how it was that Feba Custodia could be awarded Approved Contractor Status - the gold standard of the security industry.
He said: "It's perfectly possible for a company to gain Approved Contractor Status, by having on its books directors who do not show up as having criminal records.
"If they have on their books someone who has not declared their director activities that is, acting in a shadow director capacity, perhaps calling themselves a consultant, then that is something we would look at very seriously and if we found that to be occurring in a Approved Contractor we would almost certainly remove their Approval status."
He said: "The private security industry is a good industry that happens to have a few bad eggs in it.
"But with good information and with support from our partners and from anybody in the industry who's got a story to tell, we will weed these individuals out. "
He said the SIA had issued around 250,000 licenses.
He said: "We deal with over four hundred Approved Contractor companies and a whole host of additional companies and venues out there.
"It would be unrealistic to imagine that there isn't some instances of the sort of activity to which you allude, but it is not commonplace throughout the industry..."
Panorama: Britain's Protection Racket, BBC One 8.30pm Monday 21 January 2008.