UK Creditors Are Lending Millions to At-Risk Players, Abound Says

A new report suggests that the UK’s financial institutions may be exacerbating gambling harm by lending money to at-risk players. As reported by The Guardian, financial companies are unknowingly fueling problem gambling by lending millions to risky players.

Abound, a credit technology company, examined the open banking data of loan applicants. By leveraging AI, the firm checked financial transactions over six months.

The company noted that it refuses to extend credits to people who deposit more than a third of their income into gambling accounts over six months or 100% of their income in any one month. As a result, it refused to offer loans to around 29% of applicants in the examined period.

The company lends money to around 550 people a week but declines credits to another 230 because of their gambling habits. The company noted that 15% of the people it turned down had a history of successfully getting a loan from another company.

Abound said traditional credit checks might not have identified the people it turned down as problem players, since they don’t take open banking data in mind. As a result, Abound believes that as much as £174 million ($219 million) is being lent to at-risk players (players who wouldn’t have passed Abound’s criteria) each week.

Abound’s CEO, Gerald Chappell, said that lenders aren’t purposefully exacerbating harm. However, he noted that many of the tools they are using are outdated. Chappell believes that companies must update their policies and tools in line with the online era.

Creditors Must Adopt Modern Tools

Debt charity StepChange agrees that lenders are oftentimes unable to identify markers of gambling harm. Its head of policy, Peter Tutton, said:

Previous research on the experiences of StepChange clients found that lenders are not always quick enough to spot warning signs that someone is borrowing to fund gambling.

Peter Tutton, head of policy, StepChange

Tutton added that lenders must double down on their efforts to identify harmed players and at-risk players by “adopting stringent checks and affordability assessment.”

Speaking of affordability, affordability checks continue to be one of the hot topics in the UK gaming industry. As the country seeks to modernize its gaming laws, many believe that affordability checks based on losses would help to mitigate harm. However, opponents of the measure argue that it would infringe on people’s liberties.