Commonwealth Bank fined for lifting man's credit limit after he warned of gambling problem
Commonwealth Bank has been slapped with a $150,000 fine after it went ahead and gave a customer with a gambling problem exactly what he’d warned them not to.
The Federal Court heard the bank had already lifted David Harris’ limit before offering to do it again during a phone conversation in October 2016, when he said he did not want it until he was able to get his gambling under control.
“At one point I had three credit cards and they let me max them out and then put it all into one ... and then offered me more money,” he told the staff member.
“I do not really understand why they’ve offered me that considering they know, clearly see that I use it for gambling and stuff like that.
“I think that it’s pretty bad of them to offer me that when I clearly have a gambling problem.”
But the bank didn’t formally record his admission or pass it on to its credit decisions systems, so 10 days later, Mr Harris got a letter inviting him to increase his limit from $27,100 to $32,100.
Just over a month later he got another offer, this time to up his limit to $35,100.
At that time, $8000 was the maximum credit card limit offered by CBA, Justice Bernard Murphy noted.
Mr Harris took up the offer the following month, ran up a balance of $35,706.91 then failed to make a minimum repayment of $699.
“If he incurred no additional charges on his credit card and each month he paid only the minimum repayment it would have taken him 137 years and 10 months to pay off the balance,” Justice Murphy said.
“He was only able to continue to pay off his credit card because he worked extended periods without rest days, working 6 to 7 days a week, in physically demanding work as a roofer.
“He was also reliant on winnings from gambling and a loan from his employer.”
Mr Harris became physically and mentally exhausted, had trouble sleeping, and began to suffer depression and anxiety.
Justice Murphy found CBA breached responsible lending provisions and gave four reasons, including failing to make reasonable inquiries as to whether Mr Harris still considered himself a problem gambler.
The Australian Securities and Investments Commission alleged, and CBA admitted, the misconduct was the result of inadequate systems and processes for problem gambler notifications.
CBA’s credit card conduct was the subject of a case study by the banking royal commission.
The law has since been changed, with unsolicited credit limit increase offers now prohibited.
Also, a credit card contract or credit limit increase must be deemed unsuitable if it is likely the consumer will not be able to repay it within three years.
The bank has taken steps to finalise a hardship arrangement with Mr Harris and introduced measures intended to address problem gambling-associated issues, as well as broader measures to help customers manage their credit cards, ASIC noted.