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CIFAS markers: What they are and why they’re damaging

1st Jan 2022
Brought to you by

Myriad Associates helps businesses maximise tax reliefs.

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A mechanism for detecting fraud

The last thing your client needs is a CIFAS marker. They generally spell financial disaster, often destroying credit ratings for up to 6 years. On top of that, sometimes people get CIFAS markers simply by making a mistake.

If a client has just discovered they have a CIFAS marker against them, they may well be panicking. It’s not the end of the world (quite) but it is serious.

What is a CIFAS marker?

CIFAS is an acronym for Credit Industry Fraud Avoidance System. It’s a not-for-profit membership organisation operating as a fraud prevention service. It also holds and maintains the largest database of fraud cases in the UK.

Members of CIFAS span a wide range of banks, lenders, insurers and other financial institutions. Data is shared between them to reduce white collar crime and prevent fraud.

CIFAS markers essentially act as warnings to other institutions about the risks relating to a specific individual or business. Non-business related CIFAS markers usually relate to ‘First Party Fraud’ and ‘Application Fraud’.

Finding yourself slapped with a CIFAS marker - whether privately or as a business - is bad news. It’s likely to drastically reduce the chances of being accepted for credit or loans, and much stricter checks.

CIFAS markers are sometimes referred to as CIFAS entries or CIFAS cases.

Fraud is on the up

Fraud is nothing new, but since the COVID-19 pandemic hit it’s gone through the roof. Government support for businesses, like the Bounce Back Loan scheme and CBILS, massively increased applications for business finance - not all of which were genuine. In fact, in October 2020 the National Audit office raised concerns about ineffective controls around government support - particularly the BBL scheme - saying that as much as £26 billion could be lost to fraud. Even mortgage applications have been targeted over the last 18 months thanks to the freeze on stamp duty.

Banks themselves are also under pressure, with NatWest recently being fined £264,772,619 for three offences of failing to comply with money laundering regulations. The knock-on effect of this has been that many are actually trying to offload customers where there’s any hint of risk to their business.

How do CIFAS markers affect businesses?

Many businesses have been hit with CIFAS markers over the years - and it’s not pretty. Where a fraud marker is registered against a director, the very survival of the business is at risk. Business accounts will be closed and lending can be refused.

Markers that are given against business accounts can even extend to the personal accounts of company directors, and people associated with them. We’ve (unsurprisingly) heard of CIFAS markers actually being given to entire boards of directors.

How will my client know they have a CIFAS marker?

It will show up on their credit report. They may also be contacted by the bank or lender that filed it to make them aware. However, some people don’t even know they have a CIFAS marker against them until suddenly their accounts are frozen or they can’t get credit.

Credit reports are compiled by one of three credit agencies. Each agency has a statutory duty to provide people with a free copy of their report on request. This report will show details of their financial transactions as well as other details like whether they’re on the electoral roll.

The report will be accessible online, and a written copy can be provided on request.

Types of CIFAS marker and how long they last

Not all CIFAS markers are the same. There are 8 different types with each one lasting up to 6 years, except for Victim of Impersonation and Protective Registration.

Victim of Impersonation: This is where a person has had their identity stolen. The CIFAS marker lasts for 13 months.

Protective Registration: Protective Registration is a service that the consumer pays for, for instance where they have been a victim of fraud. It lasts two years.

Misuse of Facility: Where somebody has obtained an account or other facility so they can use it for fraudulent activities. The CIFAS marker lasts for up to 6 years.

First Party Fraud: Where a loan, credit or other financial agreement is taken out for goods or services with no intention to pay it back. Again, the marker lasts up to six years.

Facility Takeover: A Facility Takeover is where a fraudster takes over a bank account in order to change the details or use it for fraudulent purposes. Six years.

Insurance Claims Fraud: Taking insurance out, for example on a property or a vehicle, and deliberatively giving false information. Six years.

Application Fraud: Any application that contains false details. This could be for example a fake name, address or employment history. Lasts for up to six years.

Asset Conversion: This usually involves motor vehicles and is where someone tries to sell something they don’t own, typically because it’s on a hire purchase or rental agreement. Six years.

If your client has been given a CIFAS marker and wants to know more, they’ll need to make a Data Subject Access Request to CIFAS. The institution that actually instigated the marker against their record doesn’t legally have to explain themselves, so CIFAS is the only place to find answers.

Can CIFAS markers be removed?

Sometimes, depending on the reason. But the process of challenging and removing a CIFAS marker isn’t easy and success is far from guaranteed.

The institution that applied for the marker in the first place is under no obligation to remove it, but there is an adjudication process. It’s also possible to seek redress via the Financial Ombudsman Service.

More about CIFAS markers, and how the system works, can be found on the CIFAS website.

How can Myriad Associates help?

CIFAS markers may potentially affect companies looking to claim R&D Tax Credits and grants - but every case is different.

Myriad Associates are R&D tax experts who have spent more than 10 years filing R&D claims for clients and accountants alike. With their thorough approach and 7-star customer service, the team prides itself on working with accountants and their clients in successfully claiming what they’re owed.

If you would like to discuss a client’s CIFAS marker in relation to innovation grants and reliefs, Myriad is here to help. Call today on 0207 118 6045, or send a message here.