Case study – Misleading declaration on a mortgage company’s application form

In August 2016, we were made aware of a declaration on a building societies corporate ‘buy to let’ mortgage application form which we believed could be misleading. This stated:

 

I declare that, if I have been convicted of, or cautioned for (or charged but not yet tried with) fraud, arson, robbery or any other criminal offence (other than a motoring offence), I have given full details in this application form. I also declare that, if I am aware that any other person who will live in the property after completion of the mortgage is under investigation in respect of or has been charged or convicted of any such offence, details have also been given on the application form *. I give my explicit consent to the Society using the information that I have provided in this respect (the sensitive personal information) for the purpose of deciding whether or not to offer me a mortgage. I understand that the Society will keep a record of the sensitive personal information in its filing systems. 

 

On making further enquiries we found a further misleading declaration on the building societies commercial mortgage application form stating:

 

If  I have disclosed that I have ever been convicted of, or cautioned for (or charged but not yet tried with) fraud, arson, robbery or any other criminal offence (other than a motoring offence), I give my explicit consent to the Society using the information that I have provided in this respect (the *sensitive personal information) for the purpose of deciding whether or not to offer a mortgage. I understand that the Society will keep a record of this information in its filing systems. I also give my explicit consent to the Society disclosing the sensitive personal information to insurers in order they might consider whether to offer insurance and, if so, upon what terms.

 

We made several attempts to contact the building society to raise our concerns regarding the declarations but received no response. As a result of this we took the decision to seek advice and guidance from the Information Commissioners Office (ICO).

After investigating the matter, the ICO concluded that the declarations did not take account of the Rehabilitation of Offenders Act (ROA) 1974 and wrote to the building society, advising them of this.

The building society agreed to review the wording of the declaration on their corporate ‘buy to let’ and commercial application forms to ensure they fell in line with the ROA.

The building society has now amalgamated their corporate ‘buy to let’ and commercial application forms, removing the declarations and any reference to criminal records.

 

Lessons

This case demonstrates how building societies may believe they are doing the right thing in practice but, if they don’t have very clear declarations in place, then this can cause confusion and could lead individuals to over-disclose. This could result in building societies holding information they are not legally entitled to hold and contravening the ROA. Furthermore, given the building society in question has removed any reference to criminal records, it raises the question as to whether others should follow suit.

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Notes about this case study

This case study relates to Unlock’s work with other organisations.

Names and details have been changed to protect the identity of those involved.

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