Cayman and lazy confirmation bias

Confirmation Bias is one of the numerous types of Cognitive Biases or Heuristics (mental shortcuts) that formed the core of the work of Kahnemann and Tversky.

So, as I’ve written about lately, I’m currently looking to buy a house in the London area. I was all set this week to get a mortgage from my bank here in the UK as I “ticked all the boxes” in their words.

One last step, though, was that they had to check if it was ok with the bank risk underwriters that my income comes from my Cayman Islands company. This was nothing to do with the nature of income, they had already reviewed my Cayman corporate documents and tax filings in the UK. No, this was simply about the country the income coming from being the Cayman Islands.

You guessed right, the answer was “computer says no” to Cayman.

Let’s talk about why, and why it was due to Confirmation Bias.

So, after being turned down, I then spoke further with the friendly and highly professional mortgage specialist. I asked them to check if they would have turned me down if I lived in a very similar offshore finance jurisdiction (Jersey) with all the same circumstances. The answer was: “yes, Jersey would be fine”.

We then thought to eliminate this being about a USD vs GBP currency of income issue, so checked again if…