The Financial Conduct Authority (FCA) is the UK regulator for banks, lenders, and many other financial services firms. CIFAS, meanwhile, is the UK’s leading fraud prevention service, managing the National Fraud Database (NFD).
To ensure that fraud prevention is balanced with fairness to consumers, the FCA and CIFAS signed a Memorandum of Understanding (MoU). This agreement sets out how the two organisations work together.
The FCA’s Role #
The FCA’s statutory objectives include:
- Protecting consumers.
- Ensuring market integrity.
- Promoting effective competition.
When it comes to CIFAS, the FCA expects financial firms to:
- Act fairly and proportionately when recording markers.
- Treat customers consistently with the Consumer Protection Principles (Principle 6: Treating Customers Fairly, and Principle 12: Consumer Duty).
- Have policies and systems in place to ensure that markers are applied correctly and not misused.
The FCA–CIFAS Memorandum of Understanding #
The MoU highlights three key areas of cooperation:
- Information Sharing
- CIFAS shares fraud trends, data quality concerns, and compliance issues with the FCA.
- The FCA shares regulatory intelligence about how firms are using fraud data.
- Consumer Protection
- Both organisations recognise that fraud prevention must be balanced with consumer rights.
- The MoU emphasises proportionality: a marker should not have excessive consequences if the evidence is weak.
- Oversight of Firms
- The FCA monitors how regulated firms use CIFAS data in decision-making.
- Firms that misuse the database or fail to treat customers fairly could face regulatory consequences.
Why This Matters for CIFAS Markers #
The MoU confirms that fraud prevention does not override consumer rights. For individuals, this means:
- Banks must ensure that a marker is supported by clear, relevant, and rigorous evidence before filing.
- Firms must also comply with the Consumer Duty, ensuring that decisions are proportionate and fair.
- If a bank mishandles your case, you can raise the issue not just with CIFAS, but also with the Financial Ombudsman Service and ultimately the FCA.
Key Takeaway #
The FCA holds financial firms accountable for how they use CIFAS data. If your bank applied a marker unfairly, this could be a breach not only of CIFAS rules but also of regulatory principles, giving you stronger grounds to challenge it.
