Banks need to recognise that providing credit for gambling harms not just individual gamblers but also vulnerable people connected to them, a forum on consumer finance and ethical investing heard.
The hour-and-a-half Ethical Consulting Group (ECG) session brought together UCA Funds Management staff, and synod representatives at 130 Little Collins St. Expert stakeholders and investors also attended in person or participated online.
Outgoing UCA Funds Management CEO Michael Walsh told the Ethical Consulting Group participants on Tuesday that he wanted banks to acknowledge some basic principles, as credit cards were being used to rack up huge online gambling debts.
“It’s not people’s own money, it’s a line of credit. It’s one thing to use your money it’s another thing to rely on credit as you are doubling up the problem,” Mr Walsh said.
“The banks have got monitoring systems where they know people are gambling, particularly now that there’s such a drift to online gambling, they’ve got those transactions on their statements.”
“They could really sort this out. I think it’s a really big problem because Australia is such a gambling nation and we are really exacerbating this problem by providing credit for this move from traditional forms of gambling to online gambling.”
Financial Counselling Australia director of policy and campaigning Lauren Levin said getting ethical investor CEO support from people such as Mr Walsh had been “a game-changer” in dealing with the big four banks and other credit providers.
She said the argument often used that it was an individual’s right to place a bet in the online gambling area often translated to ‘It’s a man’s right to place a bet if he wants”.
“The flipside of almost every person that I see who has lost everything is that their partner is a victim of financial abuse,” she said.
Women married to people with gambling issues are often subjected to financial abuse where household money is dissipated on gambling without their consent or knowledge. They are often denied control and information on their household’s financial situation.
“It’s tragic for a woman to find out one day that after decades of working and joint lives, that she is left with a broken relationship and a bare bank account.
“We know of people who thought they had paid off their mortgage or almost paid off their mortgage and they find out that one partner has been allowed to draw that down and that’s hundreds of thousands of dollars.”
She cited a recent case of an elderly woman who was informed by her husband that he was bankrupting as he had over $500,000 of gambling related debts. She was at risk of losing both their home and the marriage that had lasted half a century.
Ms Levin said banks had an ethical responsibility to protect the overall well-being of their customers, or at the very least not trip them up. Sometimes they are the only ones that can see what is happening.
“This whole model of assuming people behave rationally just doesn’t work in this space where you have people with pathological gambling addictions,” she said.
“Just because they really want access to credit to gamble, doesn’t mean that banks should provide it. They should be making their loan affordability assessment taking the person as they find them, which means adjusting their algorithms to pick up gambling.
With a royal commission into the financial sector underway, the forum agreed that now is the time to press banks to be responsible lenders and to look for regulation that would cover the big four and second tier lenders.
ECG participants also discussed prospective laws to protect those using so-called payday lenders, as well as examining a case study of a new fintech consumer finance company, Afterpay, and whether it meets ethical standards of investment.
Tribute was paid to Mr Walsh’s leadership in ethical investing and advocacy.
During the session Mr Walsh talked about how a combined, targeted and persistent effort was needed to pursue ethical objectives in the business and financial worlds.
“It’s very unusual to bring about a change even if most people agree. Any engagement takes years,” Mr Walsh said.