At-Risk Gamblers Could Be Borrowing As Much as £174m Each Week From UK Financial Firms

  • Abound looks at the financial transactions of prospective borrowers
  • It believes that traditional credit checks are no longer up to scratch
  • Stricter gambling affordability checks are set to come into place in the UK
Businessmen exchanging cash
A credit technology company claims that UK financial firms could be lending as much as £174m ($219m) each week to potentially at-risk gamblers. [Image:]

A concerning trend

A new analysis of bank data throws up some concerning trends about at-risk gamblers borrowing money from financial institutions. Credit technology company Abound analyzed open banking data relating to loan applications, using artificial intelligence to look at peoples’ financial transactions over the course of six months. This led to the conclusion that individuals could be borrowing over £174m ($219m) each week from financial institutions in the UK to feed their gambling.

looks at applicants’ bank accounts before proceeding

Abound looks at applicants’ bank accounts before proceeding with extending credit to them. Anyone who spends more than 30% of their income gambling over the course of a six-month period or who adds over 100% of their income in a given month to their gambling account will not be able to get access to credit. Abound refuses around 29% of people for these reasons.

A new way of doing things

Abound claims that more traditional types of credit checks would not categorize these people as risky borrowers because many lenders don’t analyze open banking data. This means that substantial sums of money go toward these types of borrowers every week.

A rule is already in place in the UK that stops people from using debt-accumulating payment methods like credit cards when depositing funds to a gambling account.

Abound Chief Executive Gerald Chappell was quick to say that lenders aren’t doing anything wrong, but he believes that the tools they use are outdated and not as accurate in the online era. The company lends to an average of 550 people each week and turns away about 230 applicants due to their gambling expenditure. It noted that of the refusals, 15% of them were previously able to get access to money from other lenders.

Introduction of stricter affordability checks

One of the big topics up for discussion in the UK gambling scene at the moment is the government’s white paper on legislation reform. The paper was published in April and one of its big proposals is the introduction of stricter affordability checks on gamblers. The goal is to stop people from spending more than they can afford.

need to provide proof that they are able to afford such losses

These checks focus on the amount that people lose over a given period of time, rather than how much they deposit. Interactions between the gambling operator and customer would be necessary if their net losses hit certain thresholds. Customers would typically need to provide proof that they are able to afford such losses, usually by providing pay slips and/or bank statements.

While many people are not happy with the inconvenience that these checks might bring, ministers estimate that only 3% of gamblers will be impacted and that this measure could stop a lot of vulnerable people from getting themselves into a financial hole.

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