Essentially, at the begnning of the war, the British interned all German nationals. At one stroke this pretty much crippled the German espionage network in the UK.

Additionally, since the Nazi administration was built in a hap-hazard way, not much thought had been given to espionage and the commander of the Nazi intelligence service, Admiral Canaris, was not overly sympathetic to the Nazi regime and did a lot less than could have been done.

In general, German agents who were attempting to infiltrate stood out like sore thumbs. One was arrested after trying to buy a train ticket - when told it would cost "five and sixpence" he proffered five pounds and sixpence, which would have been enough to buy a second hand car back then (virtually).

Once captured, the spies would be offered a simple choice of execution or co-operation. Most chose the latter and became double agents.

A good source: The Double-Cross System: The Incredible True Story of How Nazi Spies Were Turned Into Double Agents by JC Masterman

Hinsley & Simkins', British Intelligence in the Second World War: Security and Counter-Intelligence is worth reading if you don't receive an adequate response anytime soon and are looking for a more long-winded answer to your question.