Cifas fraud markers: the problems they cause

This article concerns our recent experiences of advising company directors and individual, who have unwittingly found themselves with adverse fraud markers issued by banks with an organisation called Cifas. These markers have left them with the prospect of their credit rating being destroyed for up to six years, sometimes through no fault of their own.

Cifas is an organisation set up by banks and other financial institutions for their benefit – it flags customers who, in their opinion, may present a risk of committing fraud, and these markers work to prevent such customers from obtaining credit. Other markers are designed to protect victims of fraud, making sure banks take extra precautions for the customer.

However, there are occasions when Cifas markers are issued with disastrous consequences, particularly when the customer is innocent of any wrongdoing.  The range of issues we have experienced recently is quite alarming, and gives us grave cause for concern that some financial institutions and Cifas investigate cases to a perfunctory standard. We are also getting a better understanding of which banks are the worst culprits and are seeing repeated worrying behaviours.

For example, we have seen a number of genuine buy-to-let businesses which cancelled proposed purchases due to fears over the effect the Coronavirus crisis had on the housing market. In doing so, their deposit money has been returned to their solicitors, only for their accounts to be shut down and a fraud marker issued against them.

There has also been increased interest from clients who have invoice financing arrangements with banks, only to discover that adverse markers have been issued against them for misuse of facility.  We have seen some incredibly draconian contracts agreed by clients who have received poor levels of service, which in return cause issues.

We have also seen everything from applications for credit going wrong, people who have been wrongly named as fraudsters or money launderers, and employee disputes with financial institutions.

Frequently clients approach us when their own efforts at resolving issues have failed.  In our experience the most effective challenges to such markers can be complicated – they are heavily legalistic and involve proving that the banks have got it wrong. The definition of fraud that the banks work to is looser than the criminal law, and so even tougher to disprove.   Left unchallenged, Cifas markers can be hidden behind your credit rating for up to six years. In extreme cases, this can result in your bank account being closed at short notice, and the resulting problems in finding alternative banking facilities some businesses have failed as a result.

The good news is that when the banks get it wrong, they will admit their mistakes.

Contact us, we are here to help

Our Head of Private Prosecutions, Jeremy Asher is a regulatory lawyer with proven experience in successfully challenging such markers for company directors and individuals. Please contact him if you need support or advice.