A woman was denied a mortgage from Barclays Bank, having received preliminary approval, after the bank’s system made multiple searches on her credit history, therefore damaging her credit rating.
As first reported by mortgagestrategy.co.uk, mortgage advisor Dale Robinson complained to the Information Commissioner after an application by one of his clients was denied, although they had received preliminary approval in principal.
The customer got a new credit report following the decision, and discovered that Barclays had made four separate searches on her credit history, therefore damaging her credit rating. The number of searches made on an individual’s credit history affects their credit rating because a high number suggests they are seeking multiple loans.
Because of inconsistencies in its data relating to the applicant, Barclays searched their credit history multiple times.
According to Robinson, who was formerly a compliance officer at building society Nationwide, when an organisation searches an individual’s credit history, it should have a "soft footprint" – i.e., even if they make multiple searches in relation to the same claim, it should count as one.
However, because of an issue with Barclays’ software, each search counted separately. "It was purely a problem with their software," Robinson told Information Age today.
Following Robinson’s complaint, the Information Commissioner’s Offices ruled that the three supplementary searches were unnecessary, and said it was "unlikely that Barclays Bank has complied with the requirements of the [Data Protection Act]."
“This is because it appears unlikely that Barclays has processed the complainant’s personal data fairly, when it conducted four searches of their credit report in connection with their mortgage application."
The Information Commissioner decided not to take action against Barclays, however.
Barclays says that it is updating its software to prevent this happening again, and has installed temporary safeguards.
A Which? Money report earlier this year found that the ICO received more legitimate complaints against Barclays Bank than any other UK financial institution in 2009 / 2010, although it should be noted that it is also one of the banks with the most customers.