What does ‘Pre-Approved' actually mean?

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Total views: 12 | Word Count: 563 | Date: Tue, 1 Jun 2010 | 1 comments

After a rather unsavoury incident at his local bank, Stephen Jones vents his spleen on promises of 'pre-approved' and 'guaranteed' loans...

Forgive me, I usually try to make these blogs fairly objective (don't laugh!) but something really, really infuriated me this week. It started with a scenario you may all be familiar with: I stepped into my bank, Alliance and Leicester, to discuss some pretty dull stuff that I won't go into.

As I gave my account details, I was told with much faux excitement by the bank clerk that I was eligible for their Santander Zero Credit Card. Having had my eye on that particular card since I joined around six months ago, I duly called up head office to find out more. The lady on the end of the phone confirmed that I was entitled to the card, and this short exchange followed:

Me: ‘But could I still be rejected once I've gone through a credit search?'

Bank Clerk: ‘No. There is no reason why that should happen.'

So, happy with my afternoon's work, I duly arranged an appointment for two days later and skipped off back to work. Lo and behold, when that meeting with my bank manager came around I was politely rejected after the credit cards referencing went through. Not only does this now mean that I have a mark against my credit file for the search, but it's also one I didn't really need - I only applied for the card to utilise its 0% balance transfer deal for the first year.

Now, before you get all ‘more fool you' on me, I accept that I should have known better and double-checked my ‘real' eligibility with another member of staff. However, I surely can't be the only one who has done the unthinkable and actually accepted what a bank clerk says to be true.

Indeed, the Office of Fair Trading (OFT) (remember them?) seems to agree. In fact, on the very day that my personal saga was unfolding, they released new guidelines on irresponsible lending practices. After a brief flick through, I stumbled across Chapter 5, which reads:

"Credit may not be described as 'guaranteed', 'pre-approved', or able to be provided without any credit checks being undertaken, unless it is free of any conditions regarding the financial circumstances of the borrower to whom it is to be provided."

In short, while this sort of thing is nothing new, it is now something that the OFT have recognised as a major problem. The difficulty is, while complaining to the OFT fits nicely with my desire to support the greater good, they provide only an overview of the market and will not adjudicate independent cases. As a result, my complaint sits with my bank, and I shall let you know the results on these pages when I get them.

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Have you been stung by these false promises from banks? Compare the credit cards and savings providers required criteria online.

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