For many business owners and directors, the Bounce Back Loan Scheme (BBLS) was a critical lifeline during the Covid-19 era lockdowns of 2020 and 2021. 

But now, years later, a downstream consequence of these loans is surfacing with devastating effects for those same directors – a CIFAS marker. 

Up to £1.8 billion of loans from BBLS funds has been flagged by lenders as suspected fraud which is leading to closed bank accounts, rejected loans and mortgages and outright accusations of fraudulent activity related to those same Bounce Back Loans.

Find out what CIFAS markers are, why they are being applied to BBLS borrowers and most importantly – what steps you can take if you receive one to protect your reputation and your business.

What is a CIFAS marker?

CIFAS is an acronym which stands for the Credit Industry Fraud Avoidance Scheme. They maintain a database of individuals whom banks and financial institutions consider to be a “risk of committing fraud or money laundering”. 

Unlike standard credit defaults or risks, a CIFAS marker isn’t just a reflection of poor payment history. It’s a red warning flag shared amongst those lenders that will:-

  • Block finance – It can prevent businesses and individuals from obtaining finance, credit or financial services such as bank accounts for six years.
  • Personal jeopardy – Even if the loan was from a limited company, banks will go through the personal credit records of the directors. A CIFAS marker against you could see the closure of your personal bank accounts.
  • Career harming – Having a CIFAS marker could be personally damaging to employment prospects, especially for those working in the financial services industry.

There are different kinds of CIFAS markers that can be attached to an account whether they have been used for fraud deliberately or out of the owner’s knowledge. 

They include markers for first party or deliberate fraud, facility takeover (when an account is taken over by fraudsters), misuse of facility (money laundering) and being the victim of impersonation. 

Most markers last for six years but the victim of impersonation marker recognises an element of innocence and is only attached for 13 months. 

The Bounce Back Loan Scheme Connection

You may remember that BBLS financing didn’t require personal guarantees as other bank loans or credit facilities might. CIFAS markers effectively circumnavigate the need for limited liability protections. 

Markers can be typically applied in BBLS cases for two main reasons:

  • Application fraud – This involves applying for a loan that the company wasn’t entitled to, such as overstating turnover in order to obtain a larger loan amount. In some cases, directors used projected earnings for new businesses rather than the actual turnover and now found themselves flagged by CIFAS as a result. 
  • Misuse of funds – Most simply, this is when BBLS funds were used for personal expenses rather than for the exclusive economic benefit of the business. 
  • Evasion of payment – Other directors have received markers under the “misuse of facility” category because they have defaulted on loan repayments.

Why are more being issued now?

HMRC and lenders are under more pressure to recover taxpayer money guaranteed by the government so it can be returned to the Exchequer. HMRC are receiving more powers to investigate directors and more agents are being hired to take this work on. Both are spending more time and money on fraud databases and AI to find and punish culprits. 

One of the issues is that in the rush to set up and roll-out BBLS, banks say they were given little guidance on how to interpret the rules of the system initially. This has led to some dubious decision making where default notices and fraud markers have been issued based on error, poor judgement and scant evidence. 

Dissolving a business does not provide protection for directors either. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 allows the Insolvency Service to investigate directors of dissolved companies for suspected BBLS misuse and malfeasance.

What can you do if you receive a CIFAS marker?

There is a response roadmap if you find a marker has been registered against you or your accounts are suddenly closed but you have to act immediately. 

  • Don’t ignore it! – Ignorance is no legal defence. Ignoring correspondence from your bank or failing to update your address (or using a mail scanning service that fails to forward letters) can leave you open to legal proceedings and make the problem significantly worse. Receiving a CIFAS marker is a material risk to your business and your personal finances. 
  • Get some impartial professional advice – ideally yesterday but today is the next best time to contact a professional insolvency practitioner and inform them of your situation. They will work with you to the best of their ability and should be consulted even if you decide not to work with them ultimately. Their knowledge and expertise will set out the obstacles ranged against you.
  • Establish the facts – You have the legal right to know what information is held about you and a Data Subject Access Request (DSAR) should be submitted to CIFAS to establish these. You will need to provide proof of identity and your address history for the last six years but it’s free of charge and CIFAS must respond within one calendar month. 
  • Challenge the decision – if the bank or lender has made an error then it’s possible to remove the marker. The first step is to ask for a review by the bank that originally lodged the marker. Ensure all facts are correct and present any additional evidence of factors that may have been missed. 
  • Contact the Financial Ombudsman Service (FOS) – if the bank rejects a valid legal challenge, you can appeal to the FOS. They have the power to overturn these decisions but delays are common. 
  • Legal action – If these fail then you can contact a solicitor to take the case forward. This can be expensive and time-consuming even if it succeeds. 
  • Address the debt – One of the best ways to support the removal of a marker, especially an “evasion of payment” marker is to begin paying it. Contacting the lender and arranging a payment plan if you can’t pay off the debt in full is the best evidence that could support the request for removal.

CIFAS markers can devastate your financial life for up to six years. 

This can feel doubly unfair if you’re the victim of impersonation or fraud and still end up with one attached to your accounts. 

Sadly, you’ve probably found out in your career that life can be unfair and sometimes the best help is to help yourself. 

If you have an outstanding Bounce Back Loan and want to remove the risk of a CIFAS or have received one and want to tackle it professionally then get in touch with us. 

Our experienced and knowledgeable team will work with you to tackle your issues before you wake up one day to find your bank accounts closed.