High street insurance companies accused of breaking the law over old criminal records

A charity representing people with convictions says they are being illegally excluded from cover

Almost one in five insurers take a spent conviction into account when considering applications (Getty)

Insurance companies have been accused of breaking the law by a charity that supports people as they rebuild their lives after convictions.

Rehabilitation charity Unlock looked at 43 high street insurance companies and claims that two-thirds failed to make it clear to people that they did not need to disclose convictions that were spent under the Rehabilitation of Offenders Act 1974.

What’s more, they found that almost one in five insurers then took a spent conviction into account when considering applications, despite having a legal obligation to ignore it. And 100 per cent of the insurers researched by Unlock refused online applications from would-be customers who disclosed convictions.

Christopher Stacey, co-director of Unlock, says the charity is regularly contacted by people who are confused about what they need to disclose when they apply for insurance. If they mistakenly reveal more than they need to they will be punished for it, he warned.

“It doesn’t have to be this way and insurance companies themselves are contributing to this problem,” Stacey says.

“The insurance industry needs to update its good practice, and insurers should implement clear and consistent wording in relation to asking about unspent convictions.

“Given that two-thirds of the insurers we looked at are not doing this at the moment, there’s a lot of work to do.”

The charity is now referring its findings to the Information Commissioner’s Office, on the grounds that insurers are breaching the principles of the Data Protection Act.

Serving time means money

A spokesperson for the Association of British Insurers says this should simply never happen. “We have worked with Unlock to produce comprehensive guidelines for insurers to ensure that spent convictions that do not have to be legally disclosed are not taken into account for insurance purposes, even if they are disclosed,” they said.

“Insurers ask questions that are clear and specific, and, while some criminal convictions may have a bearing on the cost and availability of insurance, spent convictions never should be taken into account.”

Yet this is not the first time that insurers and other financial services providers have been accused of letting down people with convictions and even their families.

Earlier this year we reported on the financial exclusion affecting prisoners’ loved ones, with the Salvation Army General Insurance Corporation accusing some insurers of treating innocent family members as guilty by association.

And looking more generally at people rebuilding their lives with unspent convictions, there’s evidence that such financial exclusion risks making rehabilitation harder.

Clinks, an organisation that supports, represents and campaigns for charities that work with offenders, has said that having contact with the Criminal Justice System “exacerbates and contributes” to people’s experiences of debt, poverty and financial exclusion.

In a submission last year to the House of Lords Select Committee on Financial Exclusion, it stated: “There is a complex relationship between experiencing financial exclusion and having contact with the Criminal Justice System. Many people have experienced financial exclusion prior to having contact with the CJS and for some it is a contributing factor to their offending.

“There is also evidence to suggest that having contact with the CJS can exacerbate experiences of financial exclusion.”

It also cited older research conducted by the Prison Reform Trust and Unlock that showed 30 per cent of people in prison had no bank account and 31 per cent said they had never had one.

Worryingly, 85 per cent of people who were interviewed in prison and who did not have a bank account said they had tried to get one but had not succeeded.

John’s story

Unlock’s argument is that people with spent convictions are being deprived of their right to apply for products without their history being considered.

However, the charity has also expressed concern for those people with unspent convictions who still need to use financial products and who still want to take out insurance to protect the lives and belongings they are rebuilding after their sentences.

John is one such person. He was convicted of attempted murder in 1971 and given a life sentence; however, he has been out of prison for almost 30 years now. Yet he cannot take out home insurance because his conviction will never be spent.

He explained: “In 1986, I had a stroke and was discharged from prison and came to live here. I’ve lived here a number of years, and I can’t get household contents insurance. I’ve tried many times but because I answer the question ‘do you have any criminal convictions?’, because I put ‘yes’, I’m declined insurance because they say that the sentence isn’t spent. Well, it can’t be spent because I’m on life parole.

“So, the only way I can get insurance is to lie, but if I do lie and they find out, I’ll have paid money for years, possibly for nothing, because they will find any excuse not to pay out, and that would be a valid reason because I hadn’t answered the question truthfully.

“I just feel like I’m still being sentenced. I’m vulnerable because I’m now getting on; I’m 72 years of age. I would feel comfortable if I could have household contents insurance; I just want to insure the few bits and pieces I’ve got...

“How can I integrate with society if I can’t have household contents insurance?”

Complex reasons

There’s evidence that former offenders are not even able to seek out advice and help with their finances from charitable organisations as many believe they are not permitted to provide such guidance.

Cross-party think tank Demos warned last year that financial exclusion traps people in a vicious cycle where they are vulnerable to debt and boxed out of mainstream products. That risks leaving them vulnerable to loan sharks and high-interest borrowing.

Its report warned: “Local organisations that work with homeless people, foodbank visitors, housing association tenants or ex-offenders have the potential to advise financially excluded people who would otherwise be hard to reach.

“But charity staff that Demos spoke to were reluctant to give basic financial guidance due to many believing the FCA regulations on organisations giving financial advice are more restrictive than they actually are.”

As far as Unlock is concerned, people with convictions are being adversely affected by financial exclusion both immediately after their sentence and in the longer term.

Stacey added: “For an industry that prides itself on assessing risk, it was astounding to find that all of the insurers blanketly refused to offer cover online where an unspent conviction was disclosed – there is clearly a widespread policy of ‘computer says no’.

“Given there’s nearly three-quarters of a million people in England and Wales with an unspent conviction, with thousands of people having convictions from decades ago that are still unspent, one has to ask whether insurers are taking a proportionate approach to risk by simply refusing to offer cover to people in this situation.”