The Information Commissioner's Office (ICO) has issued guidance to the Driver and Vehicle Licensing Agency (DVLA) over what personal information it can release to third-parties.
There is concern that the vehicle licensing agency is releasing information too freely, and breaking privacy laws as a result.
The ICO says the DVLA can pass on individuals' personal details if "there is good reason", such as the prevention or detection of crime.
The guidance explains to individuals the circumstances where the information might be shared without breaking data protection rules.
The DVLA keeps a register containing details of all vehicles licensed for use on the road and can pass details from the register to a third-party for a number of legitimate reasons.
Legitimate reasons include to identify vehicles on the road to help prevent and detect crime, to investigate suspected insurance fraud, to improve road safety or to ensure that vehicles are properly taxed.
Although the DVLA does not have to obtain permission before passing an individual's details to other people, the person or organisation requesting the information must prove that they have "reasonable cause" to obtain an individual's details.
For example, a company requesting information to enforce parking fees must also provide evidence that a parking charge scheme actually exists and that drivers are made aware that the scheme is in force.
Phil Jones, assistant commissioner at the ICO, said, "The DVLA passes on information from its register to third parties for a variety of legitimate reasons. However, the person or organisation requesting the information must always provide evidence to the DVLA which shows why their request is reasonable."
It is an offence under the Data Protection Act to mislead the DVLA as to why information is required. The DVLA has made millions of pounds from selling personal information to third-parties from its database of drivers and vehicles. This practice has now been limited after an outcry, following revelations that criminals had paid for such information.