Changes to licence conditions and codes of practice on the use of credit cards for gambling
The role of financial services in reducing harms from gambling with borrowed money - summary of responses
In the consultation we explained that it is much harder for us to regulate the use of loans and overdrafts to fund gambling because operators have very little visibility of whether such forms of borrowing are funding gambling deposits.
We therefore think it is essential for financial services to take the lead in this area, and where possible work with gambling operators to develop tools and approaches that can help to mitigate the risks of harm from forms of borrowing that gambling operators have limited visibility of.
We also outlined that one of the areas of focus in our National Strategy to Reduce Gambling Harms is to support collaboration among businesses and organisations in their efforts to reduce harms, and we specifically reference our support for developments in the financial sector in this regard.
We want financial services to consider what more can be done specifically to identity their customers who use lending products to fund gambling and to reduce the risks of them experiencing harm. We outlined in chapter 3 some of the programmes of work being undertaken, or due to commence, and we strongly encourage financial services to engage with the Money and Mental Health Policy Institute’s programme of work to share good practice and deliver means of reducing harm.
We asked consultation respondents to provide their thoughts on what measures financial services could take to identify customers using borrowed funds for gambling and to mitigate harm, and also for views on the information banks and lenders might be able to share with gambling operators. We received responses from many gambling consumers, members of the public, gambling operators, and some financial services also made welcome contributions to these questions. The responses are summarised in the following paragraphs.
Consultation question 21
What measures can financial services such as banks and lenders take to identify their customers who are using borrowed funds for gambling and mitigate the risks of harm to those customers?
Consultation question 22
What information can financial services share with gambling operators to enable operators to be better equipped to mitigate the risks of harm from borrowed money?
Most respondents supported the principle that financial service providers should do more to help reduce the risk of customers suffering financial harm from gambling. Some also suggested that gambling operators could work more collaboratively with financial service providers. A summary of the suggestions and viewpoints raised by respondents are as follows.
Respondents suggested that banks should
- Monitor the gambling activity of customers who have payday loans present in their current account and be prepared to contact the customer to explore ways of reducing the risk of them being harmed
- Monitor the amount being spent by all customers on gambling, including the volume and frequency of their gambling transactions (taking account of the levels of borrowed funds in their current account, the rate of repayment of those funds, and the amount of their income such as regular salary) to ensure gambling expenditure remains affordable for that customer.
- Monitor the time of day when transactions occur (late at night being a higher risk indicator).
- Provide information to their customers to highlight their gambling expenditure, particularly where there gambling leads to use of an overdraft.
- Interact with those customers if necessary and signpost where help can be found
- Prevent further gambling transactions where the bank has reasonable concerns that the levels of gambling will lead to financial harm
- Proactively reduce overdraft limits if the customer is persistently in their overdraft due to gambling
- Take account of a customer’s gambling debts when considering any new application for a loan or overdraft extension
- Promote voluntary card blocking facilities (with cooling off periods to prevent the block being easily disabled) so that these facilities become universally available
- Share learning amongst each other e.g. examples of how banks have identified and assisted vulnerable customers with gambling debt.
There were similar specific suggestions that banks should monitor the percentage of a customer's disposable income used for gambling and the appearance of loan funds into a current account and the subsequent presence of gambling transactions
Respondents suggested that operators should:
- Make use of any available data from credit reference agencies to assess affordability (but only where credit file checks made would be soft rather than hard)
- Work with banks to explore how to improve the identification of customers with gambling vulnerability.
Respondents suggested that the Commission should:
- Work with the FCA, UK Finance and Money and Mental Health Policy Institute to coordinate expectations of financial services e.g. consider how gambling harms specifically can be considered as part of the new FCA rules on persistent debt and the emerging FCA rules on the fair treatment of vulnerable customers.
It was also suggested that payday lenders and credit reference agencies should specifically be brought into the dialogue by the Commission and FCA.
As previously explained, most online gambling is conducted on debit cards and many consumers use forms of borrowing other than credit cards to fund their gambling. Our action on credit cards must therefore form part of a wider approach to prevent harms from unaffordable gambling. This means, for example, that gambling operators and financial services should continue to make progress on preventing harm to consumers who use other forms of borrowing to fund their gambling.
However, the use of credit is only one indicator that gambling may be unaffordable - a customer can experience harm by gambling beyond their means without any recourse to borrowing. Operators and financial services should therefore also take account of a customer’s gambling spend in the context of their overall income and expenditure.
As part of the National Strategy we will continue to collaborate with key partners across the gambling, financial, charitable and regulatory sectors to support developments that can help vulnerable customers who may be at risk of harm from gambling. There is a large body of work already underway, or due to commence in 2020, concerning the role that both operators and financial services can play to reduce the risks of gambling harm to vulnerable consumers:
- The Money and Mental Health Policy Institute recently announced a a programme of work (opens in a new tab) being undertaken during 2020/21 which will engage financial services in tackling gambling-related harm, bringing banks and lenders together to highlight the latest evidence and share best practice
- That programme of work, which is funded by a regulatory settlement approved by the Gambling Commission, will complement the University of Bristol/Gamble Aware three-year strategic partnership (opens in a new tab) looking to explore the role financial services can play in reducing gambling harms
- The Behavioural Insights Team (opens in a new tab) is currently working with some financial services to understand how transactional data analysis can help to identify gambling harms.
The suggestions made by consultation respondents and previously summarised could be extremely helpful measures to identify and reduce the risks of harms from unaffordable gambling. The suggestions are not mutually exclusive, and several combinations of these ideas could be explored. Financial services should consider these measures as the programmes of work under the National Strategy move forward.Previous section
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Motivations for using credit cards to fund gambling