A businesswoman who found herself placed on the National Fraud Database after she applied to Santander for a mortgage, says she went through a “nightmare” after the bank refused to admit it had made a mistake.
When Claire Foster* from Hertfordshire applied for a buy-to-let loan, staff reviewing her application placed a note on the database of the fraud prevention service Cifas warning that she had attempted a fraud.
Despite spending weeks desperately trying to find the reason – and attempting to get it removed – she says it was as if the shutters had come down, as calls and emails to Santander went unanswered.
At one point she feared for the future of the design business she has run for more than 20 years.
The case highlights how bank staff have the power to make an accusation of fraud – with huge potential consequences – with little or no comeback and without informing the person affected.
Only after the Guardian took up Foster’s case did Santander remove the marker. It has since offered £500 and an apology; however, she says it is yet to adequately explain why it happened. It also rapidly reinstated the mortgage offer it had previously withdrawn.
She says she made the application exactly as she did for another buy-to-let loan. “I asked my broker to find the best deal, and my accountant of 20 years to provide the last two years’ tax returns to show proof of income,” she explains. “Santander duly approved the mortgage and everything seemed fine.”
However, a week later, and out of the blue, she received a letter from the Spanish-owned bank saying it would not be proceeding.
“My broker was finally told it was due to invalidated income, even though this didn’t make any sense to any of us.
“After my broker was turned down by another mortgage provider, I was advised to contact Cifas,” she says. When its report came back, she couldn’t believe what she was reading. “Santander had said I had supplied forged documents with the intent to commit mortgage fraud. It was devastating.”
Santander stated: “Unfortunately, the broker initially supplied incorrect information about her income that could not be verified, and led to the placing of the marker. We’re sorry that, following conversations with the customer, we could have taken steps to remove it sooner and can confirm we have now arranged for this to be done.”
The independent broker who arranged Foster’s mortgage told Guardian Money that Santander’s claim that the wrong income information was sent was “absolutely untrue”.
He says: “All the documents showed that she earns significantly more than the minimum £25,000 income required. Her application was audited and we duly sent off all the extra information requested.
“For the bank to then accuse her – and, by default, me – of trying to commit a fraud was unbelievable. I’ve known this client for 30 years and she does everything by the book. The consequences could have been appalling – way beyond losing the house that she was trying to buy. Without the Guardian’s intervention I think we would still be trying to resolve this.”
A spokeswoman for Cifas – a not-for-profit fraud prevention organisation – told the Guardian that it receives reports of about 2,200 cases of mortgage application fraud each year that result in markers.
“They should only be filed where there are reasonable grounds to believe that fraud has been committed or attempted,” she says. “The evidence must be clear, relevant and rigorous to such an extent the organisation could confidently report it to the police.”
She says wrongful applications are very rare. Consumers have the right to appeal to Cifas and, ultimately, the Financial Ombudsman Service.
Meanwhile, Foster is just relieved the nightmare is over.
“I did not sleep properly for six weeks as this could have ruined my reputation but also my businesses,” she says. “It has cost hundreds of pounds in accountancy fees and I will be looking to recoup these from the bank. The offer of £500 compensation is an insult when you think what they have put me through.”
* Not her real name
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