Many people with a gambling problem have been given unaffordable credit. This fueled their gambling and they got deeper into debt.
Credit is affordable if you can repay it and still pay your other debts, bills and expenses. If it is unaffordable, then you can ask for a refund of interest and charges and take a complaint the lender declines to the Financial Ombudsman (FOS).
But gambling complicates this – perhaps that loan or credit card would have been affordable if only you could stop gambling? Many people who have made an affordability complaint are worried that their complaint will be rejected because of their gambling.
This article looks at some FOS decisions that have involved gambling and affordability complaints.
FOS takes the view that a lender should not have given the credit if they knew – or should have known – that the borrower had a gambling habit.
It doesn’t matter who the lender is. As you can see from the cases below, it’s not just payday lenders, it can be major high street banks.
It is the general approach to gambling that matters here, and FOS’s approach is broadly the same across all lenders and different types of credit.
Contents
What does FOS look at when making a decision?
A lender can’t argue that the borrower should have said they had a gambling problem
Case 1: The fact the customer had not told the lender he had a gambling problem isn’t relevant:
if it had looked at Mr H’s bank statements, it would’ve quickly realised Mr H was gambling and that Mr H couldn’t afford to repay. I don’t think Mr H’s failure to tell Mr Lender about the gambling means he shouldn’t receive compensation as Mr Lender didn’t carry out proportionate checks.
Gambling isn’t discretionary expenditure
Case 2: Payday UK argued that the adjudicator shouldn’t have considered gambling transactions as part of Mr C’s expenditure when looking at affordability as they weren’t essential expenditure.
The Ombudsman didn’t agree:
Mr C’s bank statements show he was regularly spending quite a lot of his income on gambling by this point. So if Payday UK (having a full understanding of his circumstances) was thinking about what Mr C would have available the following month, based on his previous spending patterns I think it’s likely he would’ve continued to spend similar amounts on gambling.
I don’t think it’s fair to say Mr C’s spending on gambling was discretionary at this point.
Gambling showing on bank or credit card statements
Case 3: SafetyNet Credit had access to the borrower’s bank accounts. In this case, the borrower was on a good income:
Mr M was working and typically received an income in the region of £3,000 each month. Some months he also received a bonus in addition to his regular salary. This income is not however significant when comparing it to Mr M’s expenditure.
[SafetyNet Credit] had more than enough information to accurately consider Mr M’s financial position… it should have been obvious that Mr M was living beyond his means, which was likely to have been caused by his compulsion to gamble.
I think that the lending from SafetyNetCredit, and other parties, was used to fund his gambling or other existing commitments, which he couldn’t afford because he’d already spent money on gambling. It seems as though he was caught in a significant cycle of lending and gambling.
Case 4: Vanquis increase a borrower’s credit card limit despite significant amounts of gambling transactions on the credit card. The Ombudsman decided:
I’m not convinced that it can be fairly or reasonably said that any of the subsequent credit limit increases can be considered as being affordable or suitable for Mrs B at the times that they were implemented. And I say this because of the usage of Mrs B’s Vanquis credit account, which demonstrated a high number of gambling transactions which I feel should have given Vanquis cause for concern, as well as the deteriorating wider financial position of Mrs B, as demonstrated by her credit file…
Vanquis explained to this service that they wouldn’t discriminate against an account holder on the basis of how they use their account. But I’m not convinced that this argument can be considered reasonable when an account holders’ transactions highlight a potential gambling addiction.
Lenders should check all accounts a customer has
Case 5: RBS increased a borrower’s overdraft limit significantly and gave him a large loan despite gambling showing on his bank statements. The decision:
A cursory look at Mr B’s statements showed that he’d been gambling significant sums in the lead up to the overdraft increase… Mr B had gambled in excess of his declared monthly income and this had taken him close to and marginally over his existing credit limit in the month proceeding the increase.
In these circumstances, I thought that it ought to have been apparent that there was a significant risk Mr B might have struggled to sustainably repay what he already owed. And he was therefore unlikely to have been able to repay any additional credit without undue difficulty or borrowing further.
Bearing this in mind, I was minded to find that RBS shouldn’t have increased Mr B’s overdraft limit April 2019 and also suspended the use of his facility. And considering the monthly loan payments of just under £800 also took up just under half his monthly income, I found that RBS shouldn’t have provided Mr B with a loan in April 2019 either.
Case 6: Nationwide gave a customer a credit card with a large limit, £6,500, despite gambling showing on bank statements:
When conducting my own review of the performance of Ms B’s Nationwide current account – as Nationwide described that they would themselves have done – it’s of immediate and obvious concern that Ms B was consistently overdrawn throughout this period, often by significant amounts and close to the overdraft limit.
Nationwide explained to this service that they wouldn’t decline a customer’s credit application solely on the basis that the customer maintained a consistently overdrawn balance with them. I can understand Nationwide’s point here, to a degree, but it would be expected that the consistently overdrawn performance of Ms B’s current account would have been of concern here and should have prompted a more detailed check.
And, had Nationwide checked the statement transactions for Ms B’s current account for the months immediately prior to the credit account application, it would have been seen that these included a large number of gambling transactions. Because of this, I find it difficult not to conclude that Nationwide would, or should, have arrived at a different decision with regard their approval of Ms B’s application for credit, had they undertaken a more thorough check.
When lending continues, lenders should look for warning signs
Case 7: Lending Stream had given a series of loans to the customer over several years. It argued that:
it was for Mr P to provide accurate information about his income and outgoings. It said it wasn’t required to make further checks if the loans looked affordable.
The Ombudsman agreed that Lending Stream did enough checks on the first loan and was entitled to rely, at that point, on the customer’s information about his outgoings. But:
… Lending Stream’s check showed that Mr P was heavily and increasingly in debt to a range of lenders. The amount of his debt had increased greatly by the time of his second loan…
… He had credit card and short term loan debts. He was reliant on increasing short term loans to fund his gambling habit and his living expenses. I think if Lending Stream had made further checks it would have seen, as I have, that Mr P was dependent on short term loans. And so it would have decided that giving him further loans would be irresponsible.
Check what the customer tells you
Case 8: Everyday Loans spotted a lot of gambling on the one bank statement it asked the customer for – he explained that he didn’t have a gambling problem and had closed his account. But the Ombudsman decided:
Mr C’s gambling expenditure was significant. In the month before he applied for the loan he had spent an amount in excess of his normal income.
Mr C’s earlier bank statements show clear evidence that he was in fact regularly spending large amounts on online gambling transactions. It is clear from those statements that the spending wasn’t, as Mr C had suggested, simply related to the summer football tournament. His statements appear to show that he was in fact suffering from an addiction to gambling, and he was funding that expenditure by borrowing from a range of other lenders. I don’t think, had it seen that additional evidence, that [Everyday Loans]would have agreed to give this loan to Mr C.
Case 9: George Banco gave a guarantor loan to consolidate payday loan credit without considering the borrower’s full circumstances:
George Banco hasn’t provided any evidence to show how it understood which [payday loans] would be repaid and at what cost. I can’t see that it could make a fair lending decision without knowing this. In addition, Mr S was spending a significant proportion of his income on what seem to be gambling transactions in the months prior to this loan. So from this, combined with his reliance on payday loans, I think the lender ought to have realised Mr S was having problems managing his money and there was a high risk he would be unable to sustainably repay this loan.
Hard to win complaints
Not every complaint involving gambling is upheld.
Cases where the loans are small and someone only borrowed a few times are always difficult to win regardless of the gambling element. The lender often just didn’t know enough to see that the borrower could be in trouble and the amount of credit was so small detailed checks did not need to be made.
Case 10: A Myjar case involving five loans. Here the lender had offered to remove the interest from the last loan and accept a repayment plan but the customer felt that was insufficient. The Ombudsman agreed that only refunding the last loan was reasonable as the loans were small so the checks made were proportionate.
It is also hard to win cases where gambling has only recently become a problem. If you have a good credit record and are well paid, there may be no warning flags that suggest a lender should look in detail at your application.
The “standard” compensation
FOS awards in the vast majority of cases
The standard compensation if an affordability complaint is upheld is for interest to be refunded. If a balance is still owing, the interest refund first reduces the balance and any remaining amount is refunded in cash.
The effect is that people have to repay the amount they borrowed but not any additional interest or charges added.
FOS says about credit records:
We’d typically expect a lender to remove any adverse information on a loan, from the borrower’s credit file, where a complaint is upheld for irresponsible lending.
The refunds and credit records also include taking account of payments made to a debt collector if the debt had been sold, and removing (the legal term is set aside) any CCJ.
It is very unusual not to have to repay what was borrowed
This only tends to happen when the lender was specifically aware that the borrower had a major gambling problem – not by working it out from bank statements but because of previous interactions with the customer where gambling had been discussed.
Case 10: Lloyds gave a customer who had asked for a gambling block on her account two large loans within 6 months, both were said to be for the pur[pose of buying a car. The first loan had been repaid soon after it was given. The Ombudsman found that Lloyds had made reasonable checks for the first loan, but not for the second much larger loan:
The entire amount of the funds advanced for loan 1 were transferred to a betting company, which transactions to were supposed to be blocked, the day after the funds were provided. Lloyds said the use of a third-party service to make the transfers meant that any gambling block would have been negated. Although I wasn’t entirely persuaded by this argument given the payments were made using a well-known third-party payment service to a highly recognisable high-street betting company, which Miss D had been told transactions to had been blocked, clearly appeared within the transactions…
Lloyds chose to lend [the second loan] in these circumstances despite the reasonably foreseeable prospect of
the funds dissipating as a result of being gambled away and being no longer available to repay any debt as a result…
I don’t think removing the interest fees and charges goes far enough. The circumstances of this case and in particular the financial hardship which is likely to be caused by requiring Miss D to pay funds she doesn’t have and is unlikely to get, lead me to think that the fair and reasonable thing for Lloyds to do here, given all the circumstances, is write off the outstanding balance on loan 2…
it seems to me removing adverse information from Miss D’s credit file, increasing the chances of her being able to borrow further would be counterproductive and arguably not in her best interests, or those of any potential lender. So I think it’s fair and reasonable for Lloyds to reflect what I’m asking it to do in relation to the outstanding balance on the loan and record it wrote off a balance on this loan on Miss D’s credit file.
How to complain – tell your story
There isn’t a special template for gambling related complaints. Instead, use the template letters for affordability complaints that is right for the sort of credit you are complaining about, see links to the refund templates.
If a lender rejects your complaint, you can send it to the Ombudsman. You can’t go direct to FOS.
If one of these cases above sounds a lot like your situation, this doesn’t mean you will get the same result. But as you can see from these cases, FOS doesn’t start from the position that it is your fault you were gambling.
When you are sending a case to FOS, be completely open about your gambling problem and the way it interacted with your borrowing from this particular lender. Just tell your story.
And do send your bank statements and a copy of your current credit report – they are the evidence that supports your complaint!
But if you are still gambling…
You can make an affordability complaint if you still have a balance owing to the lender (or debt collector if it has been sold).
But making these complaints if you still have a gambling problem is pretty pointless. If you get any money back you will probably soon be donating it to the bookies and their shareholders…
I know it’s hard, but you need to stop gambling first. Then when you have been “clean” for a while, these complaints can help rebuild your finances.
So read How to escape from the bad credit trap on how a debt management plan can help and How gambling wrecks your finances which looks at the different ways to get help.
Matt says
Hi Sara
Sorry to bother you but was wondering if there are any presidents to asking for a refund from Tesco and virgin from transaction made in2022. I have been reading that credit card transactions in casino should have not been authorised. I managed to lose £8000 and hundreds in interest change by taking out cash advance . Looking back both credit card companies should have declined the cash advance which have put me in to further debt . Have you got any ideas who would be the best people to talk to. And to raise a complaint.
Sara (Debt Camel) says
taking out cash advance
so you were withdrawing cash on the cards?
were the casinos in this country, abroad or online?
What were the credit limits on each of these cards?
Matt says
Hi Sara
Thanks for getting back to me .
I was in a physical casino in the UK .Using a card machine to get a ticket which charged huge amounts of cash advances fees then taking ticket to counter to exchange for casino chips .
I had two credit cards with £4000 on Virgin
and £5000 on Tesco , going through affordability checks at the moment with both .
But charge cash advances fees on all transactions in the casino .
Thanks again
Matt
Sara (Debt Camel) says
How long ago were these transactions?
Matt says
Hi Sara
Back in the summer of 2022.
Thanks
Matt
Sara (Debt Camel) says
You may have a case against the casino for allowing this, see https://www.gamblingcommission.gov.uk/licensees-and-businesses/print/preventing-credit-card-use. This isn’t something I can help with.
Matt says
Okay Sara , I will have a look at the information you have sent me . Thanks again for you support as always.
Matt
Daniel says
Hi sara , I’ve got an issue but I am not entirely sure where it stands .
My phone provider.
EE
Allowed me to rack up bills every month .
On betting websites I paid by phone bill.
I went to the max limit of £240 per month .
Probably for the best part of 2 or 3 years.
Could this be sent to the FOS as this is not a loan or credit card.
Sara (Debt Camel) says
I hope you have managed to stop this gambling.
But I don’t think FOS can look t this as it isn’t a matter of credit.
Matty346 says
Hi,
Please can I get your opinion on my case.
HSBC approved an £8,000 loan despite clear signs of financial vulnerability, as my account showed no regular income and only gambling-related transactions, with £32,000 deposited into online casinos over three months. I never made any other payments from this bank within the three months. The bank had previously blocked a gambling payment but once I called up they allowed it and never blocked any payments again demonstrating awareness of my gambling activity. Just before and on the day of the loan, I deposited £5,250 into an online casino, and within hours of recovering the loan £3,000 of the loan was lost to gambling. HSBC failed to conduct proper affordability checks in line with FCA regulations looking at my account activity it was obvious what the loan was going to be used for. The loan was also approved instantly with the funds in my account within 10 minutes of the loan being accepted.
Sara (Debt Camel) says
how long ago was this loan?
Matty346 says
Hi Sara,
Thanks for the response.
Within the last month.
Sara (Debt Camel) says
do you have any of the money left? you should repay it instantly.
Do you want to stop gambling? If you do, install Gamban.
i think you can make an affordability complaint about this but if you win it will only remove the interest from the loan, you still have to repay what you borrowed
Matty346 says
Yes I still have some of the loan what I intend to pay back immediately.
Would I not have a case for a partial refund of the loan due to irresponsible lending? The loan was approved instantly with many red flags missed.
Sara (Debt Camel) says
That is VERY unlikely. You can ask for it, but don’t get your hopes up. Repay what you can immediately
Julie says
Hi sarah,
I was wondering if you could help me because I’m unsure what to do. I’ve been clear of gambling for more than a year now.
I made a complaint about Novuna finance about a loan that I took out for £4000. At the time prior to the loan being taken out, I have bank statements to prove that I had spent nearly £23000 in one month alone gambling I sent theses in as evidence of affordability in my complaint. At the time I also had 5 other creditors and a total debt amount of £21,000 on a £25,000 salary.I’m now in a DMP.
In a final response they have stated that they conducted appropriate affordability checks electronically via my credit file. They have stated whilst their checks have been proposonate, they have offered on this occasion to write the interest off the loan in total and just repay the outstanding balance. I have only a few more weeks to accept or decline this offer.
Whilst they have admitted no liability in the final response, I do not believe that companies willingly write of the interest if there is, not a substantial case against them with the FOS. I have a default on my credit from this company and a refusal of a new repayment plan. I believe these are points maybe the FOS could help with. However, if I take it to FOS, the offer will be recinded and FOS could review the case and advise Novuna are actually correct in affordability checks and offer nothing. Let me know your thoughts on if I should accept or decline.
Sara (Debt Camel) says
So how much is the balance now and how much are they saying it will reduce too?
Does your credit record for this loan show a default or a missed payment or what?
What is the rest of your credit record like?
Julie says
Balance will reduce to £2333 by taking off the interest of £2078. As the total borrowing was just over £6300 with intrest. Recorded on my credit file as a default. All of my other loan accounts and cards are also recorded as defaults now aswell.
Sara (Debt Camel) says
So you are getting all the interest removed – you wuldn’t get any more by going to the ombudsman.
BL says
Hi Sara,
I put a complaint into HSBC (first direct) and received a final response letter 9 May 2024. They had explained to me in their response and provided details for the financial ombudsmen. I contacted them to raise my complaint in relation to loans that were unaffordable totalling approximately £23,000.
The financial ombudsman have come back to me and said that because I raised my complaint outside of the 6-month window of receiving the final response, that they can’t help me with it. I did explain to them that the reason I hadn’t raised it before I did (the deadline was 9 Nov 2024 and I submitted it to the FO 26 Nov 2024), was due to some mental health problems I was facing during that period and due the embarrassment of the situation. I did also explain to them that I wasn’t really sure if the financial ombudsman could help me as I didn’t understand what they were for and what they could help me with. I’ve never been in this position before so it was all new to me.
Is there anything I can do?
Sara (Debt Camel) says
It may help if you can produce some evidence of the mental health problems
BL says
Thanks Sara,
The FO did explain this but also said that this wouldn’t necessarily show that I was ‘incapacitated’ and the likelihood of me getting an extension of time/exception even with proof is unlikely. The exact wording was ‘it probably won’t be considered as exceptional circumstances under the rules.’
Because of this I explained that I wouldn’t look to get the evidence but still continue as not only would it bring back quite a lot of unwanted memories and feelings, but because I didn’t want to go through this process and then still be told that they can’t help me anyway if the bar is so high and probably wouldn’t even be considered.