How far back can a bank review accounts for underwriting?

[_OkGo_]

We recently switched our mortgage to AIB and we were already existing banking customers of AIB.

No problems switching, we provided all the usual statements for the previous 6 months but this was not required for AIB accounts as they can already access them.

One thing that I thought was odd was that they asked questions about a lump sum received 10/11 months ago. It wasn't a problem for us, easily explained as the proceeds from an ESPP sale, but I wasn't expecting them to go back so far.

I had a look through the application forms and didn't see anything explicit about how far they could go back or where consent was given for this, maybe it is buried in the fine print somewhere. And maybe I naively assumed that they would only access the previous 6 months just like the non AIB statements we provided.

So my question is, how far back can a bank review your accounts for a mortgage application if you are an existing customer? And are there rules/guidelines that the bank should be adhering to here (e.g. the typical 6 month request)?

Just because they can access this info, does it mean that they should be allowed to if treating all customers equally?

 

[ClubMan]

Well they'll go back at least 5 years for your credit history. I wouldn't have thought that going back less that a year of your accounts/general finances was unusual?

 

[ryaner]

When I got a mortgage with BOI a few years back, they wanted 3 months statements. Ended up covering around 5 months after some delays.
Ulsterbank originally wanted 6 months, then as soon as they saw some self employed income, they started reviewing further back even though the PAYE income easily covered the remortgage requirements.

There does seem to be some logic to it behind the scenes where if they see some things, they request longer periods to review.

 

[_OkGo_]

Well they'll go back at least 5 years for your credit history. I wouldn't have thought that going back less that a year of your accounts/general finances was unusual?

You are missing the point of my question.

I know my credit history will be checked as part of an application and it serves a different function so the 5 year timeframe is not relevant.

As an example, if I switched to any other lender, my application would only be assessed on the 6 months worth of statements that I provide. However in this case, AIB went back further just because they could. But should they be allowed and did they expressly get my permission to do so? Again maybe it's buried in the T&C's but I don't recall seeing it

There does seem to be some logic to it behind the scenes where if they see some things, they request longer periods to review.

Again, while similar, it's not the same. In your case, they requested and you provided additional information. It was your choice to provide it. And self employed income is always more thoroughly reviewed.

But in our case, they chose to have a look back through our accounts for no reason. It was not requested and we didn't provide it. And I don't know how far back they actually went.

 

[ArthurMcB]

Surely they can go back greater than 6 months if they like. They need to satisfy themselves as to your affordibility, creditworthiness etc etc. Its their perogative. I dont think there is an explicit restriction on them from doing so.

You say they looked at your accounts "for no reason". They might say they had reason.

 

[RedOnion]

But should they be allowed and did they expressly get my permission to do so?

It's an interesting question. More generally, did they seek your permission to look at your current accounts at all even for the last 6 months? I don't think they or any lender do. It's possibly covered under their data privacy notice that they can use certain data in approval of new lending products.

 

[_OkGo_]

Surely they can go back greater than 6 months if they like. They need to satisfy themselves as to your affordibility, creditworthiness etc etc. Its their perogative. I dont think there is an explicit restriction on them from doing so.

No, it shouldn't be "if they like" and it's not a prerogative. And you are also missing the point. With any other bank, my application is assessed on what I provide. If they are unhappy or have concerns, they can request more and it is my choice to provide it or not. I have no problem with this.

Again with another example, if I did not bank with AIB, they would not have queried that lump sum because they never would have seen it. So in essence, they have treated my application differently because I am an existing banking customer

It's an interesting question. More generally, did they seek your permission to look at your current accounts at all even for the last 6 months? I don't think they or any lender do. It's possibly covered under their data privacy notice that they can use certain data in approval of new lending products.

Yes, this is what I am getting at with my question. The application only requests 6 months of non-AIB statements, it doesn't actually state what they will do with AIB account info. I have scanned (but not thoroughly read) some terms and conditions and I don't see any mention of what rights they reserve to use account info. The Data protection notice does contain several generic 'how we use your data' but nothing specific.

 

[time to plan]

No, it shouldn't be "if they like" and it's not a prerogative. And you are also missing the point. With any other bank, my application is assessed on what I provide. If they are unhappy or have concerns, they can request more and it is my choice to provide it or not. I have no problem with this.

Again with another example, if I did not bank with AIB, they would not have queried that lump sum because they never would have seen it. So in essence, they have treated my application differently because I am an existing banking customer



Yes, this is what I am getting at with my question. The application only requests 6 months of non-AIB statements, it doesn't actually state what they will do with AIB account info. I have scanned (but not thoroughly read) some terms and conditions and I don't see any mention of what rights they reserve to use account info. The Data protection notice does contain several generic 'how we use your data' but nothing specific.

I doubt they need any consent from you to look at this. They are the Data Controller so your current account details are hardly private to them. They may have regulatory obligations around money laundering to ask you questions. While it is true that you have been treated differently than a non-AIB customer would have been, it doesn't follow that they have done anything wrong.

Have you asked them about this?

 

[ryaner]

Again, while similar, it's not the same. In your case, they requested and you provided additional information. It was your choice to provide it. And self employed income is always more thoroughly reviewed.

In my case the mortgage was with Ulsterbank and all my other accounts are with Ulsterbank. I didn't actually provide anything, it started when they queried something in the previous few months of the application, then one I told them it was sole trader type income, I started getting questions going back two years along with other requests.
I got the impression from the lady I was dealing with that they look back a few months and if they see nothing, they just stop, but if anything flags, they keep going. She did apologises about it at the time as we were almost done with the process when the underwriters flagged things for another question, basically starting that part again. The sole trader income wasn't being a factor in the approval given that the PAYE income more than covered the remortgage requirements.

 

[NoRegretsCoyote]

The application only requests 6 months of non-AIB statements, it doesn't actually state what they will do with AIB account info. I have scanned (but not thoroughly read) some terms and conditions and I don't see any mention of what rights they reserve to use account info. The Data protection notice does contain several generic 'how we use your data' but nothing specific.

Lenders have not only the right but the obligation to assess repayment capacity. Central Bank consumer protection code says:

The level of information gathered should be appropriate to the nature and complexity of the product or service being sought by the consumer, but must be to a level that allows the regulated entity to provide a professional service

You can read on through section 5 of the Code. It is about making sure that banks have sufficient information to make a good risk assessment, and also that the customer is not subject to predatory lending (they don't call it that). To me it imposes a pretty high bar for the mortgage lender to get over to grant you a mortgage.


I'm not sure if that specifically answers your question on "how far back can they go?" for AIB customers, but to me it seems reasonable for the lender to define what they feel is sufficient information is for underwriting. Put it another way, would you have refused them if they'd asked for specific permission?

 

[_OkGo_]

Thanks for that, I had been reading the consumer protection code last night. However, I disagree that it is a 'right' but rather an obligation of the lender to satisfy themselves of a consumers affordability and perform the appropriate due diligence. I don't particularly care how much information they need or want, however, I do care how they gather it and it should be clear from the beginning.

Section 5 of the code is suitably vague to allow plenty of interpretation but the use of "sufficient" and "appropriate" does not imply the lender can do what they like with information they already have access to.

A regulated entity must gather and record sufficient information from the consumer prior to offering, recommending, arranging or providing a product or service appropriate to that consumer. The level of information gathered should be appropriate to the nature and complexity of the product or service being sought by the consumer, but must be to a level that allows the regulated entity to provide a professional service and must include details of the consumer’s

I'm not sure if that specifically answers your question on "how far back can they go?" for AIB customers, but to me it seems reasonable for the lender to define what they feel is sufficient information is for underwriting. Put it another way, would you have refused them if they'd asked for specific permission?

This is my point, it is not defined for AIB accounts. The info required is defined for non-AIB accounts, for non-PAYE income and most other relevant items. I wouldn't have refused permission (it made no difference to me) but that still doesn't justify them looking. Interestingly, having looked through the consumer protection code it mentions in Section 3.33

A regulated entity must ensure that there are effective Chinese walls in place between the different business areas of the regulated entity, and between the regulated entity and its connected parties, in relation to information which could potentially give rise to a conflict of interest or be open to abuse

This is the basic point I am making. I have no problem providing 6/12/24 months of accounts if that is required. But the industry norm is typically 6 months so it should apply to AIB and non-AIB accounts. When the underwriter looks at my application, they should only see 6 months of my statements. There should be sufficient barriers in place to prevent them going further back unless specifically requested and acknowledged by the consumer

 

[NoRegretsCoyote]

But the industry norm is typically 6 months so it should apply to AIB and non-AIB accounts. When the underwriter looks at my application, they should only see 6 months of my statements.

I don't see anything in the Code which says that banks have to be absolutely consistent between use of of information they may already hold and information that they seek directly form the customer.

There should be sufficient barriers in place to prevent them going further back unless specifically requested and acknowledged by the consumer

The threshold is "conflict of interest or be open to abuse" and I don't see how what AIB have done comes anywhere near either of these.

 

[_OkGo_]

Granted I'm cherry picking lines from the code but to illustrate my point:

A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it:
2.1 acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market;
2.5 seeks from its customers information relevant to the product or service requested;
2.11 without prejudice to the pursuit of its legitimate commercial aims, does not, through its policies, procedures, or working practices, prevent access to basic financial services;

You are right that the code does not state there needs to be absolute consistency between information they hold or gather but at a very high level, they should seek this info from the customer and not go digging for it themselves.

If the lump sum was in a non-AIB account, they never would have seen it and never would have questioned it. So in treating an AIB and non-AIB customer fairly, the same standard should be applied to all information gathered. If it was Haven, they would not see my AIB accounts despite being part of AIB. So why should the AIB mortgages entity have unlimited access to my banking history?

It made no difference to me, I didn't suffer any financial loss but there are plenty of applicants that spend 6-12 months cleaning up their finances to prepare for a mortgage application. I think it would be unfair on a customer to be refused based on inconsistent working practices.

Anyway I think I'm done with my own digging

 

[NoRegretsCoyote]

You are right that the code does not state there needs to be absolute consistency between information they hold or gather but at a very high level, they should seek this info from the customer and not go digging for it themselves.

The Code does not say this though

Plenty of people would be annoyed to be asked by the bank if it can look at information it already holds!

 

[time to plan]

Thanks for that, I had been reading the consumer protection code last night. However, I disagree that it is a 'right' but rather an obligation of the lender to satisfy themselves of a consumers affordability and perform the appropriate due diligence. I don't particularly care how much information they need or want, however, I do care how they gather it and it should be clear from the beginning.

Section 5 of the code is suitably vague to allow plenty of interpretation but the use of "sufficient" and "appropriate" does not imply the lender can do what they like with information they already have access to.



This is my point, it is not defined for AIB accounts. The info required is defined for non-AIB accounts, for non-PAYE income and most other relevant items. I wouldn't have refused permission (it made no difference to me) but that still doesn't justify them looking. Interestingly, having looked through the consumer protection code it mentions in Section 3.33



This is the basic point I am making. I have no problem providing 6/12/24 months of accounts if that is required. But the industry norm is typically 6 months so it should apply to AIB and non-AIB accounts. When the underwriter looks at my application, they should only see 6 months of my statements. There should be sufficient barriers in place to prevent them going further back unless specifically requested and acknowledged by the consumer

They didn't 'gather' it except to maintain your bank account records. You are dealing with a single corporate entity for both you current account and mortgage. It's perfectly reasonable for them to look at your entire record.