Have I uncovered a procedural flaw re. Starling BBLs?!

jamooola

Hi all. First post! Long time lurker - I thought I'd start paying back for all the help over the years.

So. I think I may have uncovered a flaw in Starling's Bounce Back Loan application system which could explain why they seem to have such a high rate of rejections.

I'm a sole trader, quite badly hit by Coronavirus, but fortunate to have an excellent credit rating and have ten years of trading etc. All in all, an ideal applicant for the BBL. Because of this, I was very surprised to be rejected by Starling. After much hairpulling, I finally received a reason for the rejection, which I think will be of interest to people on this forum.

"Your application was declined due to your documents not supporting the application. Your tax return stated a figure of circa £XXXXX but your application stated a figure of £XXXXX."

During the process of the application I had to upload an SA100/302 for financial year 2018/19, but also enter my turnover for calendar year 2019, which was to form the basis of my application. Starling are now saying that these figures should be the same, and rejected my BBL because these figures didn't match. Correct me if I am wrong, but my understanding is that financial year 2018-19 is April 2018-March 2019, meaning that these are two different assessment periods (in fact, they only overlap by a couple of months). My guess is if they are conflating these two different windows there would be a large number of situations where there were discrepancies between these figures.

Could this potentially explain why there have been so many rejections with Starling?

Jeremy535897

It does sound possible.

jamooola

Jeremy535897 said:

It does sound possible.

Hi Jeremy. Thanks for your reply. Although this is a hard thing to confirm at this stage, this may have affected quite a large number of people. Do you have any suggestions as to who I should contact or what I should do next?

DCFC79

Take it to the financial ombudsman, put a complaint in first if you haven't already.
Do remember though that your credit rating is only seen by yourself, the history is what lenders see.

Jeremy535897

I take it these figures are turnover? I would write a letter to the complaints department, copying the information request (calendar year turnover 2019, SA100/302 2018/19), pointing out that the two figures have to be different (your SA302 for 2018/19 could have shown figures for the year to 31 December 2018 if your year end was 31 December, but never the figures for the year to 31 December 2019), and copying the reason for rejection.

The next question is the issue of any loss or remedy. Leaving aside the unquantifiable emotional stress etc, can you point to a financial loss? Did you get a BBL elsewhere? If you did not, are you wanting them to revisit their rejection? Explain what it is that you want them to do about it. Send it recorded delivery as well as email.

jamooola

Thanks to everyone who has replied. This is my only option for a BBL, so I will make a complaint firstly through their own complaints procedure and then follow up through the ombudsman if unsuccessful. I will update the forum if any information I receive might be of use to others.

Paul_01

I have nothing but praise for Starling in how they handled my BBL application, but I would be very interested in how they answer your complaint.

jamooola

I have an interim update. Starling have agreed to look again at my application, despite rejecting it initially. The issue is my turnover was lower in 2018/19 than in calendar year 2019. Although they know that these two basis periods are different, for sole traders whose start year starts in April they have been using tax returns to verify it. It now seems obvious the way the system was developed by government it is mostly geared to VAT registered companies who do January-December accounting. A friend of mine has actually had the same problem with NatWest.

Starling have told me they will only take tax returns into consideration for assessing BBL if you don't have a long history of using them for your accounts. In fairness to Starling, it is impossible for a sole trader to prove their calendar year turnover using their tax return. However, it's pretty poor that this isn't made clear during the application process, which specifically asks for you 2019 calendar year turnover. A note, for example: "if there is more than x% difference between 2018/19 tax year and 2019 calendar year turnover, please enter 2018/19 tax year" would seem the obvious thing to do. It's even worse that they just rejected it outright and told me initially there was no way to appeal, when they could have asked me for further information.

I will have to wait and see if they accept my 2019/20 tax return. My advice to anyone applying for BBL who has a difference between 2018/19 income and 2019 turnover of more than a few thousand is to call your bank's business team, or put in the figure from your 2018/19 tax return, so long as it gives you the level of borrowing you need.

Jeremy535897

I seem to recall that the requirement started out as calendar year 2019 turnover, which is more geared to limited companies than sole traders (although the VAT issue is a red herring, as the VAT quarter end need not, and often does not, coincide with the financial year end). Then someone realised that to prove you were in business, you had to submit a tax return, the most recent being 2018/19. You also needed to show that you were in business from 6 April 2019 if you had no business bank account. At some point it seems someone at Starling decided it would be a good idea to compare calendar year 2019 turnover with 2018/19 tax returns. I ought to be at a loss to understand why a bank would follow the advice of someone so totally ignorant of the basics, but after 50 years of dealing with banks, sadly I am not.