Huawei have a deal with TalkTalk to do covert DPI snooping on their customers traffic then TalkTalk covertly and then anonymously scrape websites using their customer's urls, supposedly scanning them for malicious content. (By the way, just to make you feel more comfortable, Phorm have a done a deal with Huawei too, back home in China.)
Government action/regulatory clampdown so far? Well - nothing yet. But the ICO is looking at it, and is said to be "disappointed". Police have shown no interest in a RIPA prosecution. Home Office are clamped down tight, and have absolutely nothing to say about the matter. TalkTalk mysteriously switched the whole thing off when the press found out. According to Home Office Minister Nick Herbert (written answer in Parliament) no one has even been in touch with Home Office to make representations about it, although I personally know of about seven people who have in fact done so. Maybe he thought they were vexatious.
So it looks like the Chinese arrived here quite some time ago, they've certainly scraped MY website this summer, courtesy of TalkTalk, but without either TalkTalk's customers or me, being asked first. As they appear to have open access to most of our ISP network already, as dephormation says above - why bother with all this diversion stuff. If you've been given the front door key you don't need to climb in the back window.