Bank accounts and a history of fraud

Aim of this page

The aim of this page is to provide guidance for people looking to open a bank account with convictions who also have a history of fraud. It’s part of our information section on banking.

Why is this important?

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. However, it is not clear whether ‘may’ means ‘they might’ or ‘may’ in this instance means ‘they have the ability to, so they will’. It’s important to know what information banks have access to about you and how they will use this when deciding whether to offer you a bank account.

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 prepared to share fraud data with others through the CIFAS National Fraud Database and/or the Internal 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 prevention of 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?

All CIFAS markers, other than Protective Registrations and Victim of Impersonation markers, last for 6 years and are not dependent on how long the fraud carries on for. If an individual is found to commit fraudulent conduct again after the initial instance has already been filed to the National Fraud Database, a new marker would be created by the member organisation the new instance was committed against, which would last for 6 years from the date of the new marker.

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.

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.

How can I challenge a CIFAS warning?

You 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.

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 their application handling process.

If I’m 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 few providers that Unlock have been advised by their members who have been able to help in these situations.

Managed bank accounts

Managed bank accounts are often referred to as guaranteed accounts. In return for a monthly fee, managed bank account providers offer a type of high-street current account,

Examples of managed account providers are:

• Card One Money Current Account
• Think Money Current Account

Prepaid cards

A prepaid card is not a bank account, but it works a bit like one and only allows you to spend money you’ve paid in. They don’t offer any overdraft facilities so don’t allow you to get into debt. You won’t need to pass a credit check and the card can be used to buy things in shops and withdraw cash.

There is some useful information about prepaid cards on the MoneySavingExpert website.

We would normally only suggest that you look at a prepaid card if you have tried to open a basic bank account and have been unable to. They should generally only be used as a last resort, because:

1. Whereas basic bank accounts have no opening or monthly costs, most prepaid cards will ask you to pay a one-off application fee which can be up to £10. Some will also require a monthly fee which could be between £2-£5. The cost of using a prepaid card can quickly add up, so look carefully at the fees associated with the card before you take it out.
2. Prepaid cards are not covered by the Section 75 protection of the Consumer Credit Act. However, you will usually have access to Visa and Mastercard’s charge back schemes.

Examples of prepaid cards include:

1. Pockit, which charge 99p for the initial cost of the card, and then a 99p monthly fee
2. Optimum, which charges £5 for the initial cost of the card, and then no monthly fee.

These cards will often also have charges for making simple transactions like withdrawing money from ATM machines.

Release from prison (and just after) can be a time of uncertainty and change and tying yourself to a monthly fee, and ongoing costs for making simple transactions, may not be wise at this time. If you find that you can’t keep us your monthly payments then this will impact on your credit rating and possibly your ability to get credit in the future.

Discuss this with others

Read and share your experiences on our online forum.

Useful links

Below you will find links to useful websites relating to this page. More specific details (including addresses and telephone numbers) of some of the organisations listed below can be found here.

• CIFAS
• Money Saving Expert

More information

1. For practical information – More information can be found in our banking section
2. To discuss this issue with others – Read and share your experience on our online forum
3. Questions – If you have any questions about this, you can contact our helpline.

Get involved

Help us to add value to this information. You can:

1. Comment on this page (below)
2. Send your feedback directly to us
3. Discuss your views and experiences with others on our online forum