For some, the internet is a mix of appealing-looking ‘online casinos’ – with their Las Vegas imagery and roulette wheels – together with easily accessible loans (with online applications and few background checks). Borrowing money and online gambling are so closely knitted together, that it’s surprising that this is not an issue talked about more often. The good news is that this is an area that Allegiant is very familiar with, and we can help retrieve interest charges back from irresponsible lending.
Why is gambling an issue?
The rules state that lenders should be carrying out proportionate ‘borrower-focused’ checks to make sure a loan can be sustainably repaid. This means that the credit should be able to be repaid from income or savings over the life of the credit. Gambling winnings are not a reliable form of ‘income’ and people who spend large parts of their salary on gambling websites are unlikely to be able keep up with loan repayments without undue difficulty. In upholding an unaffordable lending complaint, an Ombudsman stated:
“…it is clear that Mr T was using these funds, as well as others from many other short-term lenders, to gamble. And I think that further proportionate checks would more likely than not have shown Mr T’s ability to make his payments was going to come down to, in large part, his success as a gambler.”[1]
Should the lender have known about the gambling?
Before providing credit, lenders need to act upon what they know or ought to know. Checks need to be proportionate. So, for example, a one-off application for a £100 loan repayable over a month is unlikely to reveal an underlying gambling problem. It simply would not be proportionate for a lender, in those circumstances, to be carrying out a full financial review – given the size of the loan. In this case, if you complained about unaffordable lending, it is unlikely you would get your interest back – even if you had a gambling problem at the time.
However, let’s say you had gone back to the same lender for a sixth loan of £100 – in as many months – then it would be proportionate for the lender to be carrying out really detailed checks. The lender would need to be asking some very serious questions about habitual repeat borrowing. Similarly, lenders who provide larger loans, perhaps a few thousand pounds, will need to carry out more detailed checks, from the start, to ensure that the credit can be sustainably repaid over a number of years. Some lenders will carry out a review of a customer’s bank statements before agreeing to lend, and they may see gambling transactions on the bank statements. Shockingly, some lenders still proceed to provide a loan even when they know the customer has a gambling problem. One Ombudsman, in upholding in the customer’s favour, outlined the following:
“…in this case I’m satisfied Everyday Lending already knew about the gambling and the financial difficulties from the previous complaint, and I think it should’ve made a clear note on Mr W’s file in the event of any future applications”[2]
Even if a lender providing a large loan did not know about the gambling activity, it may be the case that they ought to have known. In other words, had the lender carried out detailed and proportionate checks, the gambling would have come to light. An Ombudsman reflected:
“Of course, different checks might show different things. But I think if Mobile Money had carried out what I consider to be proportionate checks, I think it’s likely it would have discovered more about Miss K’s financial position. In particular I think it more likely than not Mobile Money would have realised that Miss K was regularly gambling considerable amounts of money”[3]
Is gambling just a legitimate pastime?
It is common for gamblers to feel shame about their habit and to try and hide this from lenders. Customers may even provide false information to get loans. However, the lender may still have a duty to delve deeper – to find the true financial picture. And it is a poor defence for a lender to simply point out that gambling is a legal activity, when it is often not the customer’s own money they are spending on gambling – as explained by an Ombudsman:
“…as Mr D was constantly using his overdraft he wasn’t spending his own money. He was gambling funds that Lloyds was lending to him”[4]
It is also not just the initial lending decision which needs to be responsible, but also any credit limit increases or extensions to the credit, need to consider the customer’s circumstances:
“While I acknowledge Barclaycard’s comments that gambling was, at the time, a legal and legitimate way to use his credit card, I think the volume of transactions across the accounts it says it looked at, ought to have prompted it to look further”[5]
If gambling is still a problem…
At Allegiant, we can offer our expertise in making an unaffordable lending claim, and help get your interest charges back. But if you are concerned about a current gambling problem, we suggest you seek expert help from an organisation such as https://www.gamblersanonymous.org.uk/
[1] https://www.financial-ombudsman.org.uk/files/275798/DRN0472437.pdf
[2] https://www.financial-ombudsman.org.uk/files/146330/DRN5783817.pdf
[3] https://www.financial-ombudsman.org.uk/files/286819/DRN-1975051.pdf
[4] https://www.financial-ombudsman.org.uk/files/278807/DRN-1835400.pdf
[5] https://www.financial-ombudsman.org.uk/decision/DRN-2945958.pdf