The investigation follows a complaint by a Facebook user who was unable to fully delete their profile from the social networking site, even after terminating their account.
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Currently, personal information remains on Facebook's servers after a user de-activates an account, says the BBC.
Facebook told the BBC that it believed its policy was in "full compliance with UK data protection law".
Facebook said it would be working with the ICO to iron out any privacy concerns.
Storing profiles of de-activated accounts allows Facebook to re-activate them if a user has a change of heart and wants to resume their social networking.