Applicants are required to self-declare they meet the eligibility criteria for the Scheme. Applications from eligible borrowers will be subject to customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.
My emphasis. I thought banks weren’t allowed to conduct extra checks, and I recall Starling getting a lot of stick from MSE for appearing to conduct credit checks, when actually it clarified its AML and KYC checks were embedded in soft credit checks, and that hard credit checks were carried out only for new customers (which is normal).
The BBB told us that while lenders cannot generally undertake credit checks for bounce back loan applications, banks can credit check applicants who are new customers and are opening an account with them for the first time.
Lenders can also do anti-fraud checks, known as anti-money laundering (AML) and know your customer (KYC) checks, on existing customers applying for bounce back loans – and these may be ‘embedded’ in a lender’s existing credit checks, in which case the lender must disregard ‘pure credit’ related flags (ie, ignore any info purely relating to a customer’s creditworthiness when deciding whether to lend). Starling said it did do this with existing customers, but that credit checks on them were disregarded unless they gave rise to fraud concerns, in line with the rules.
When asked why it had incorrectly told customers they wouldn’t be credit checked, Starling told us its ‘customer declaration’ form (shown below) was provided by the BBB and couldn’t be changed, and that the term merely means the customer is waiving their rights to a claim against the bank for mis-selling.
It’s worth noting Starling’s not alone in doing ‘soft’ credit checks on new customers. HSBC, the other main bounce back loan option for those applying as new customers, also does it.
(Source)
My suspicion is the Starling was highly efficient at getting these loans out the door, and now this ex-civil servant, who would always have been worried about the lack of responsibility built in to the scheme by the Chancellor, is shouting about his cold feet.
I guess we’ll find out, but I highly doubt Anne Boden would gamble her banking licence with shonky business practices.