A This is Money reader had two job offers snatched away from him because he had a fraud marker on his file that he didn’t even know about, which caused him financial strain and stress.
The black mark had been put on his records following a failed mortgage application a year earlier. It only came to light after the reader failed background checks for two jobs, leaving him unemployed and in the dark about what was being held against him.
The case raises real questions about what information is held about Britons without their knowledge, and their ability to contest it.
The reader, who works as a contractor in the financial services industry, received the first job offer in July last year.
Unknown marker: Our reader was locked out of work in the financial services industry, twice, as he had a fraudulent marker on his Cifas file without his knowledge
The interview was successful and he resigned from his previous role. All that was needed was background checks to be completed before he started the job the following months.
The jobseeker thought this aspect would just be a formality as he had no criminal background or issue with his finances.
So he was shocked when some days later he received a letter from the employer withdrawing its offer, saying checks had come back with the menacing wording: ‘Do not employ’.
The reader, who wishes to remain anonymous, was gutted and could not understand why he had been rejected.
The employer would not tell him why he failed the background check, but sent him a sheet detailing which agencies it uses for checks, including Cifas and Experian.
The reader was perplexed – the only explanation he could come up with was that maybe he wasn’t on the electoral register.
He applied for another job, passed the interview with flying colours – but failed the background check once more.
This time, after some probing the employer in question, it revealed the rejection was due to a market on Cifas.
Cifas stands for Credit Industry Fraud Avoidance System. It is a not-for-profit organisation that it says exists to reduce and prevent fraud and financial crime.
It maintains a database of individuals who carry our fraudulent activity. Financial services providers can provide it with information about their customers.
Employers in some sectors, financial services in particular, run checks on the database to see if applicants have a record, before deciding whether or not to offer them a job. Some will also check other databases for details of applicants’ credit score.
The logic is that if, for example, someone has been caught making fraudulent claims on an application for a loan, they may not be suitable for a job in financial services.
In some industries, such as the financial services sector, background checks, including for fraud and a credit search, are compulsory when looking to hire a new staff member.
We revealed last November that nearly 2,000 job applicants had been turned down for roles in the past year after background checks revealed they had ‘bad debt’.
A difficult cycle can emerge, whereby job applicants are unable to work because they have bad debts, which gets them further into debt and even less likely to receive a job offer.
The reader contacted Cifas and found a single entry was on his file – and was shocked to see it was from the Bank of Ireland.
It dated back from early 2016 when the bank had declined him for a buy-to-let mortgage application.
The property he was buying was in Belfast and getting a mortgage for it proved difficult at the time.
Three lenders rejected his mortgage application: one said the £53,000 mortgage he had applied for was too small a sum, another claimed the property was the wrong height; the third lender he tried was Bank of Ireland, which he contacted via his financial adviser.
It too turned him down but he says it didn’t give him a concrete reason why.
A week later, he managed to finally sort the mortgage with BM Solutions and that, he believed, was the end of the matter.
However, lurking in the background was a fraud marker issued by the Bank of Ireland – of which he says he was never made aware.
Cifas told This is Money that these markers can be placed on an individual for up to six years ‘if someone is considered to pose a fraud or money laundering risk.’
When the jobseeker discovered it, he wrote to the bank to get the marker removed.
It agreed to do so, but was keen to add that it believed it had acted correctly in attaching the marker to him.
Incredibly, Cifas members do not have to have to proactively tell an individual that a marker has been placed.
The Bank of Ireland says he had ‘undeclared commitments’ which he believes relates to credit cards.
He held a few, but says he sent over the details of them to Bank of Ireland, which he adds were on the first page, along with bank statements and outstanding personal loans information, when applying for the mortgage.
Turned down: Our reader was rejected for a small buy-to-let mortgage by Bank of Ireland, which has a UK presence
He says: ‘It has caused me lots of problems, not being able to work or even apply for jobs in my industry knowing I would be turned down due to background checks.
‘I’ve had emotional stress and not working has put a strain on my finances. I wonder how many people have gone through the same stress by a marker they never knew existed.
‘I am horrified that a bank is allowed to perform such an action that can have such a profound experience on someone’s life and never inform them.
‘Simply by responding to my financial adviser would have avoided any of this every happening. Instead, the Bank of Ireland seem quite happy to hide behind “undeclared commitments”‘.
The reader says it has since refused to tell him or a lawyer what it means, but will tell the Financial Ombudsman if asked.
Cifas says that undeclared commitments is a type of fraudulent conduct that can be recorded onto its database and is often logged when an individual doesn’t declare all financial obligations, such as outstanding debt.
Cifas says some people will deliberately not declare all their commitments knowing that if they did their application would not be successful.
Cifas added: ‘In the case of financial undeclared commitments, the individual would need to be referred to the relevant credit reference agency or agencies to see what data was found. They will then have the opportunity to correct it if it’s found to be wrong.’
The reader has written to the FOS, believing that the bank is trying to wriggle out of blame and any compensation.
In his letter, he has asked for more information on what questions Cifas asks in order to put a marker on an account.
He adds that if the Bank of Ireland put the marker on his account to stop him applying for other mortgages, it clearly didn’t work.
As well as the buy-to-let mortgage he secured shortly afterwards, he was able to apply and obtain a joint mortgage with his wife and also renew their residential mortgage – all it did was stop him from working.
He also wants answers as to how staff are trained in Cifas at the bank saying that one customer service agent he spoke to had no idea what Cifas was.
In fact, he claims in one letter sent from the bank, they spelt Cifas ‘Cyphus’.
Furthermore, he says the decision by Bank of Ireland to remove the marker so easily should be questioned.
He adds: ‘If it believed their decision for Application Fraud was genuine, then what research did the bank perform to work out that it should be removed, other than myself saying to them that I am unable to find a job due to having this marker at Cifas?’
In a letter at the start of January, Bank of Ireland said: ‘Our position is that this was correctly reported due to undeclared commitments.
‘We have removed the marker, as although relevant at the time of application we do not believe this is an ongoing concern.
‘In summary we do not uphold your complaint that the Cifas entry was incorrectly reported.’ It then goes on to add the details of the FOS.
This is Money approached Bank of Ireland but it didn’t wish to comment on the case.
How Cifas works – and how to challenger a marker
We contacted Cifas who gave us a detailed overview of how it works. Cifas operates the National Fraud Database and the Internal Fraud Database in conjunction with the Information Commissioner’s Office
Before an organisation is able to place a warning about someone on its database, it must be in a position to make a formal complaint to the police or other relevant law enforcement agency.
It must have carried out checks of sufficient depth to satisfy this standard of proof.
Typically, organisations will have found material falsehoods in the personal information supplied on an application, proposal or claim, or in the case of an account, policy or service, and will be able to demonstrate that the behaviour of the customer amounts to fraud.
A criminal offence must be identifiable, Cifas adds.
It says all individuals when applying for a financial product will have been provided with a Fair Processing Notice.
In a nutshell, this explains that if fraud is identified, their details will be shared through a fraud prevention agency and this may have an impact on their ability to gain other products, services and employment.
The Fair Processing Notice also details how individuals can contact the fraud prevention agencies used and obtain a copy of any information held about them.
If an individual is rejected for a product, account or a job application, they have the right to ask what information has been used in that decision.
But the reader claims he was never given a concrete answer from Bank of Ireland as to why he had been turned down.
If Cifas data has been used, its rules mean an individual must be told that fraud prevention agency data has been used and given advice on how to contact it.
It’s now down to the FOS to determine whether the correct procedures had been undertaken.
It says members are responsible for the filings they make and they do not need to contact Cifas to delete it.
It adds: ‘We audit our members on a regular basis to review cases and ensure they are being filed within the Cifas rules.
‘It is important to note Cifas members cannot auto decline applications on the basis of a Cifas warning, any decision to grant credit or application approval is down to each individual lender’s risk appetite.’
If an individual is aware of or believes Cifas data has impacted on a decision, they can request a copy of any data held by returning a Subject Access Request form, along with payment and appropriate proofs of identity and address.