UK lenders fuelling problem gambling

Financial institutions in the United Kingdom have been found to be lending as much as £174 million per week to individuals spending heavily on gambling activities. 

Credit technology firm, Abound, has studied open banking data concerning its own loan applications and has brought its findings public in the hopes of positively altering the industry. 

Using the latest in generative artificial intelligence (AI) technology to assess financial transactions across a period of 6 months, the leading debt charity, StepChange analysed Abound’s findings and suggested that lenders could not only be facilitating but unwittingly be fueling gambling problems. 

This is because lenders have been found quite commonly to be extending credit to individuals who spend a significant amount on betting activities either online or through wagering at high street bookmakers.

Abound

Abound itself rejects any loan applications from individuals who deposit over 30 percent of their income into gambling accounts which has led to Abound refusing nearly 29 percent of its loan applications. 

However, the issue stems from the fact that traditional credit checks do not encompass the identification of such gambling risks directly converse to Abound’s approach that utilises open banking data.

Furthermore, Abound had lent to an average of 550 people on a weekly basis, while rejecting roughly 230 due to their gambling spending. Of these 230, at least 15 percent had already managed to obtain loans elsewhere.

According to StepChange’s head of policy, Peter Tutton:

“Currently, lenders aren’t doing anything wrong. But the tools they are using, like credit ratings, are outdated and unable to identify many financially vulnerable potential borrowers in the online era.”

Data findings

In Abound’s findings, it can be garnered that nearly £174 million per month has been lent to individuals who would not have passed Abound’s checks, This is based on Abound’s target market which lenders in the UK extend a staggering £600m of credit a week.

Impending affordability checks

This data comes in lieu of the UK government’s impending revision of affordability checks with efforts to toughen up these measures remaining heavily delayed.

Specifically these checks will assess whether gamblers in particular are spending beyond their means. 

Converse to Abound’s methods, however, these would be based on losses incurred as opposed to account deposits which may actually be offset by any winnings. 

Significantly the proposed approach from the government would only actually see 3 percent of individuals in the market in question affected.

Gambling pushback

This discourse is not a one-way flow, however, as the impact on civil liberties through such checks of either nature has been highlighted by several pro-gambling campaigns and lobbyists. 

It has been argued that the enjoyment of gambling activities should not be disrupted in order to accommodate uncompromisingly for those with a gambling problem. 

Notably, betting with a credit card has already received a ban but all other forms of loan acquisition for gambling have peculiarly remained unaffected. 

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