Reports gathered by VERY SERIAL suggest that UK financial firms and lending institutions ‘may be lending over £174m a month to high risk gamblers’ such as people who are using a risky proportion of their income on gambling. This was the result of an analysis of the spending patterns of loan customers.
An analysis of spending patterns among loan customers suggests that financial institutions in the UK might be providing loans exceeding £174 million per month to individuals who are allocating a precarious portion of their income to gambling activities.
Credit technology firm Abound utilized open banking data from loan applicants and utilized artificial intelligence to evaluate their financial transactions over six months.
Debt charity says lending to high risk gamblers may be promoting gambling problems
This research has prompted concerns from debt charity StepChange, which believes that lenders might unintentionally exacerbate gambling problems by granting credit to individuals who deposit a substantial portion of their funds into gambling accounts or wager in physical bookmakers.
Abound employs stringent criteria, denying loans to those depositing over 30% of their income into gambling accounts on average over six months or more than 100% of their income in any given month within the period.
Approximately 29% of loan applicants were rejected based on these conditions.
Traditional credit checks typically used by lenders that do not extensively analyze open banking data might not identify these borrowers as high-risk.
Calculating from Abound’s target market, where lenders extend £600 million of credit weekly, an estimated minimum of £174 million is being lent each week to borrowers who would fail Abound’s checks.
The UK government’s delayed proposals for stricter affordability checks to assess if gamblers are overspending continue to spark debate.
These proposed checks would consider losses rather than the amount deposited into an account.
Advocates argue that these measures, affecting only 3% of gamblers, could prevent financial distress among vulnerable individuals. However, some pro-gambling groups question the impact on civil liberties.
StepChange emphasizes the need for lenders to adopt more stringent checks and affordability assessments to identify gambling harm, while Abound’s CEO underscores the limitations of outdated tools in identifying financially vulnerable borrowers.
Despite lending to 550 people weekly, Abound rejects an additional 230 based on gambling spending. Of those declined, 15% had secured loans elsewhere.
While credit card betting is prohibited, little has restricted gamblers from using other forms of borrowed money for gambling activities.