Islands urged to create centralised electoral registers to resolve credit card issues
Words by Alex Watson, video report by Will Tullis
People in the Channel Islands and the Isle of Man are being refused credit cards because the islands do not have centralised electoral registers, according to the Jersey Consumer Council.
The consumer rights group is calling for a single register to be created to avoid credit card companies withdrawing services they previously offered to customers in the Crown Dependencies.
More than 800 people responded to a JCC survey saying they had an application for a credit card rejected.
Tradesman Chris Robbins is one islander who was rejected because of his location.
He told ITV News: "It was only when I did my own investigations I learned that it was because I was in the Channel Islands that I had been rejected.
"I felt a little bit outcast in that I couldn't apply for one just because of my geographical location."
Chris Robbins said he was unable to get a credit card for his business because of his location
In recent years, lenders have started rejecting new applications from island residents, refusing to offer renewals to existing customers, or in some cases closing existing accounts altogether despite customers having good credit ratings.
Officials from the Consumer Council have been meeting with credit card companies, credit reference agencies, finance industry bosses and regulators to try and find out why.
Carl Walker, the JCC's chairman, says there are a number of factors influencing lenders' decisions including a move by UK-based banks and lenders 'ring-fencing' their operations in the wake of the 2008 banking crash.
What is ring-fencing?
Financial institutions operating across multiple jurisdictions often choose to segregate parts of their business, keeping assets aside for a specific purpose.
For example, keeping UK and offshore banking operations within the same business separate.
This can be done to comply with various local tax regimes or to protect assets from losses incurred elsewhere in the business.
In Jersey, there is no single electoral register, with the 12 individual parishes managing their own records of who lives where.
Mr Walker says that makes it too difficult for lenders to perform checks on who they are lending money to, describing the lack of a single register as "a huge stumbling block for credit reference agencies".
He said: "We have worked very hard to try and get clear answers as to why this is happening to not only Jersey residents, but also those in Guernsey and the Isle of Man, but it is a very complicated problem we are facing.
"It would seem, in Jersey‘s case, that the inability of credit reference agencies to easily prove or check who people are, particularly those who have no credit history from living in the UK, is a huge, stumbling block.
"Experian, one of the UK’s leading credit reference agencies, told us that many applications would be successful if they had better access to islanders’ data."
He said credit card companies also cited difficulties pursuing individuals who get into debt through the island's courts.
Carl Walker told ITV News complicated systems in the islands mean residents are missing out on helpful products and services being offered by UK lenders.
Mr Walker added: "We are mindful of Jersey’s unique electoral system, and the identity and authority each parish does, and should hold, in this island.
"However, if some kind of resolution can be found, which does not remove any authority from the parishes, then it should be explored as a matter of urgency.
"We are very concerned that this trend from UK banks could spread towards mortgage applications, loans, credit and other finance-related services.
"We would be happy to work with whatever agency or government department can take this forward, on behalf of islanders, to get a quick result, before the problem gets any worse."
Barclays confirmed Channel Islands customers are no longer eligible to apply for a Barclaycard as a result of UK ring-fencing legislation.
The company said: "We remain committed to providing an excellent level of service to customers in the Channel Islands, and we continually review the products and services on offer in that market.
"Barclaycard sits within our UK ring-fenced bank, and its products are designed for UK residents.
"As such, anyone applying for a new Barclaycard must have a permanent UK address. There is no change to arrangements for existing cardholders in the Channel Islands, who we will continue to support."
Similarly, M&S Bank stopped accepting applications for credit cards from the islands in 2016.
The company told ITV News it is now only able to provide credit cards to people who live in the UK:
"Like the majority of UK banks, we only offer credit products to UK residents, this means we don’t offer products in the Channel Islands. We apologise for any disappointment this may cause."
Most existing customers in the Crown Dependencies who applied before the ring-fencing rules came in have been able to continue using their existing credit cards.
Consumers in the islands aren't the only ones facing difficulties.
ITV News has heard from several local businesses which have struggled to apply to take card payments from payment processing companies in the UK.
Robert Mackenzie's business organises holidays for visitors to the Channel Islands as well as overseas breaks for residents.
He says there is a "major and growing issue" around credit cards in the islands.
Mr Mackenzie said: "As a merchant, we are finding we're incurring significantly higher costs because we are a company based in the Channel Islands which some card issuers regard as an international jurisdiction and slap an additional fee on top of the standard processing fee.
"That has significantly increased the cost to us for accepting credit cards, they're something like 2-3x higher than they were a few years ago."
Business owner Robert Mackenzie says it costs 2-3x more to accept credit card payments compared to a few years ago
He added that it is unfair for businesses in the Crown Dependencies to be charged more than their UK counterparts as there is no fundamental difference in the way transactions are carried out.
He said: "What I don't really understand is these cards are issued by UK banks, they are sterling transactions.
"So there is absolutely no difference in the transaction element of it compared to someone purchasing a holiday from a company based in the UK, but simply because we are based in Jersey, they demand an additional fee from us to process our credit cards."
Diane de Garis from the Guernsey Chamber of Commerce says often businesses aren't able to pick and choose which payment processor they use.
She told ITV News: "If you're looking on Google directly for a payment platform, you're probably on page 5 or 6 before you're able to find one that will accept Channel Islands-based businesses.
"You don't necessarily go directly to look for a payment platform, you're often looking for a booking system or an engagement system.
"[The platform companies] generally choose who they partner with, which are the big players like Stripe and GoCardless, so then you have a system where you can't use the payment part."
Diane de Garis knows first-hand what it is like when a payment processor cuts ties to the islands as it became too difficult to do business.
She added: "When I started my business in 2014, I started using GoCardless which was a brilliant system, I recommended it to all my clients, but then they pulled out of Guernsey because it was too hard to do business here - they can't just look up businesses through Companies House.
"We said at the time 'this is going to get worse', and it has. More and more providers have pulled out [of the Crown Dependencies].
"Businesses aren't just struggling to get started with them, but they're having the service pulled out from under them, which is even harder."
Philip Ozouf is Jersey's Minister for External Relations and Financial Services. He told ITV News the government will work to address the issues stopping islanders from accessing financial products:
"The government considers it important that there is appropriate provision of credit cards and is looking to address the issues raised by providers as part of its work to ensure access to high-quality financial services for all islanders."
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