Criminal convictions and a history of fraud

Introduction

This guide is for people with convictions who also have a history of fraud. Each bank has the right to determine which customers it offers a bank account to, and they have a duty to protect their existing customers and the wider economy from risks such as fraud, money laundering and the financing of terrorism.

All basic bank account providers may exclude people convicted of fraud. This is made clear from the Moneymadeclear booklet on basic bank accounts. However, it is not clear whether ‘may’ means ‘they might’ or ‘may’ in this instance means ‘they have the ability to, so they will’.

What is classed as ‘fraud’?

There is no single definition of what is meant by the term ‘fraud’. However, any false representation, abuse of position or the prejudicing of someone’s rights for personal gain can be deemed as criminal activity and can therefore fall under the umbrella of fraud. Banks commonly share information when assessing potential risk and this would usually fall into one of the following 3 categories:

  • Convictions under the Fraud Act 2006
  • Fraud against financial institutions
  • Fraudulent benefit claims

What is CIFAS?

CIFAS (Credit Industry Fraud Avoidance System) is a not for profit membership association representing the private and public sectors and is dedicated to the prevention of fraud, including staff fraud and the identification of financial and related crime. It is not the only fraud detection agency which offers services in this area but it would appear to be the most visible.

Membership is open to organisations such as telecommunications, retail, customer service centres and financial services, who are able to identify fraud and are prepares to share fraud data with others through the CIFAS National Fraud Database and/or the Staff Fraud Database. At present these members are predominantly private sector organisations, however, public sector bodies may also share fraud data through CIFAS to prevent fraud. As a result CIFAS are able to provide a range of fraud prevention services to its members, including a fraud avoidance system.

What are their aims?

  • Build on crime prevention data sharing to encompass both the private and public sectors in the public interest
  • Protect the interests of CIFAS members from the actions of criminals by pooling information on fraud and the prevented fraud
  • Ensure that innocent members of the public, who are victims of fraud, are not prejudiced by the misuse of their identities and documentation

How does CIFAS work?

CIFAS enables members to exchange the details of applications from individuals for products, services or employment which are considered to be fraudulent, because the information provided by the applicant fails verification checks. Members can also exchange information about accounts and services which are being fraudulently misused. An example of this would be fraudulent insurance claims. CIFAS members also exchange information about innocent victims of fraud to protect them from further fraud.

This exchange of information is usually made possible by a clause that you agree to when you make an application or a claim for goods and/or services which explain how your data may be used. CIFAS information is not used to assess your ability to obtain an account, product, facility, insurance policy, benefit or employment as it is not a credit reference agency, but is only used to prevent the possibility of further fraud taking place.

CIFAS members are required to operate effective in-house procedures to enable fraud or attempted fraud to be identified and classified. Basic information on each case is filed on the CIFAS database and this information is then transferred electronically to a number of participating agencies.

When a member searches the CIFAS database through one of the agencies, the member is made aware of the need to investigate by means of a flagged warning. The member is then required to conduct an investigation into the case and not just reject the application, as it may prove to be a genuine application.

Information held by CIFAS

If you have a warning on your file this does not mean that you have been blacklisted.

A CIFAS member that receives a CIFAS warning from the system is not allowed automatically to refuse an application or to close down a product or service because of such a warning. They are required to make further enquiries to confirm your personal identification details before making a decision. If they identify a fraud, they will normally not proceed with an application or may review a facility or employment.

However, there may be other reasons why your application may not be approved. For example, you may not meet the decision-making criteria. In the event of this happening you are entitled to ask the member why it is they have chosen to decline your facility. However, the member will normally be able to provide you with an explanation and provide you with details of any credit reference agencies or fraud prevention agencies which they have used.

How long does this information stay with CIFAS?

The time a CIFAS warning remains on the CIFAS database depends on how long the fraudulent activity continues. CIFAS members are able to extend the duration of a warning to protect individuals from fraud, as long as there is proof that the fraudulent activity continues.

As with the Credit Reference Agencies and other Fraud Prevention Agencies, from 1 January 2012, a fraud will remain on the database for up to six years.

How does this relate to the data held by Credit Reference Agencies (CRAs)?

Credit Reference Agencies are companies licensed to operate by the Office of Fair Trading under the Consumer Credit Act. They make credit information data available to organisations that are either processing applications from consumers or managing their accounts. They typically hold details of the electoral roll, details of county court judgments for debt, bankruptcy information, details of previous searches made by organisations against their databases and details of individual accounts held by the consumer, highlighting any late payment history.

In order to obtain a copy of your credit file detailing your credit history you may make an application either online or by post to a credit reference agency, such as Equifax or Experian, who make a charge of £2 for this service. For more details on how to get a copy of your credit file, see the credit rating section of this site.

Obtaining a copy of your credit file will provide you with a better understanding of why a potential lender may have rejected your application.

CIFAS data relates solely to fraud and cannot be built into any credit scoring model that may be used by organisations and Credit Reference Agencies. CIFAS data is processed by a number of fraud prevention agencies who provide fraud prevention services to CIFAS Members. For further details of fraud prevention agencies click here.

Has this been linked with the terms of the Rehabilitation of Offenders Act?

CIFAS does not hold any criminal records data and the CIFAS National Fraud Database is entirely separate from any data relating to criminal records.

How do I find out what information CIFAS holds on me?

CIFAS information can only be viewed by its members. However, the Date Protection Act 1998 gives you the right to seek Subject Access to a copy of any data that the CIFAS hold about you in return for a statutory fee of up to £10. For more information, click here.

How can I challenge a CIFAS warning?

This should write to the CIFAS member organisation who recorded the data as they are responsible for the accuracy of their data. When writing to them you should:

  • Ask for the matter to be registered formally as a complaint
  • Detail exactly what you are complaining about, giving a full explanation as to why you consider that the CIFAS warning is unwarranted
  • Enclose copies of all relevant documents to support your case

This request would then be processed and looked at in more detail. CIFAS members tend to have their own complaints procedure which should be explained to you when you contact them.

If you are unable to reach an agreement on your complaint, you should request confirmation in writing from the CIFAS member that the complaints procedure has been completed or exhausted. This is sometimes known as a “Final Response Letter”.

Only upon receipt of this letter you can make a request for CIFAS to investigate your complaint. CIFAS will contact the CIFAS member and review all the details of your complaint, however, they do not have the power to recommend financial awards, but they will confirm whether the CIFAS member adhered to the correct procedures.

For full details of the CIFAS complaints procedure, click here.

The use of information by banks

How will a bank decide whether to refuse my application?

Each organisation will have its own policy or criteria that it uses to make its decisions.

If you have been declined for a product or service, then there are a number of reasons why your application may have been refused. It may possibly be due to information on your credit file or for reasons related to an organisation’s credit scoring systems or specific lending policy.

You have the right to ask the organisation for a manual review of your application and, if the organisation’s decision remains unchanged, they should be able to indicate to you their reason(s) for refusal. Although CIFAS information is not used as part of any credit scoring systems, organisations may refer to CIFAS data (among other data sources) during its application handling process.

If I am rejected by a mainstream bank, what should I do?

There are a number of reasons why you may have been rejected and it may have nothing to do with fraud. If you have a copy of your CIFAS records and see no information on there, it is likely that you were refused for other reasons e.g. eligibility. In this situation you may try another bank.

However, if you have been refused on the basis of a record of fraud, there are some potential routes. These should not be seen as recommendations – these are simply a couple of providers that Unlock have been advised by their members who have been able to help in these situations.

They (and a number of others) offer managed accounts for people who have got into financial difficulties. These are managed bank accounts and charge a fee.

 

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