It has taken seven months but Commonwealth Bank of Australia has learned its fate. The Australian Securities and Investments Commission has ordered Commonwealth Bank of Australia to pay a $150,000 fine.
The fine relates to seriously failing to protect a problem gambler from himself from 2016 to 2018.
David Harris was a Commonwealth Bank of Australia customer for several years. He funded his gambling activities with one of the bank’s credit cards. The bank increased Harris’ credit card limit in 2016 and 2017. They did this despite Harris notifying the bank he was a problem gambler. Harris told the bank he wasn’t accepting any credit card offers until he got his gambling under control.
Commonwealth Bank of Australia simply didn’t listen to Harris’ pleas. They increased his spending limit several times throughout 2016 and 2017 and Harris fell deeper into debt.
Harris had enough and started legal proceedings. He told a Royal Commission on financial services his story. His gambling problem was there for all to see, Harris explained.
Commonwealth Bank Of Australia Admits Failings
The bank issued a statement in March admitting failings under the National Consumer Credit Protect Act.
“We did not do the right thing by this customer and we apologise.”
That is a major understatement.
An emotional Harris broke down while giving evidence to the Royal Commission. He explained he began using his Commonwealth Bank of Australia credit card in 2015. He quickly reached its $10,000 limit. His debts soared to $27,000 by April 2016 and he began working weeks on end in an attempt to pay back the money he owed.
Harris contacted the bank in October 2016 to change his address. The bank offered him another increase to his spending limit, taking it to $32,000. Harris rejected the bank’s offer.
“I said no. I explained that I’m a gambler, I have a gambling problem. They can clearly see that because of the transactions I’ve been making. I don’t understand why they keep offering me money”
The bank wrote to Harris offering him the increase. Harris held out until January but then accepted the increase. He soon maxed out his card.
Bank Gives Customer the Run Around
Harris’ boss paid off the $35,000 worth of debt and went to a Commonwealth Bank of Australia branch to close the credit card account. They were told they needed to call the bank to cancel the card. They were told to go to a branch after the called the bank.
Harris cut up his card but soon requested a replacement and racked up another $30,000 debt.
Commonwealth Bank of Australia and Harris struck a repayment deal but that was flawed also. The bank initially sent a letter refusing Harris request for assistance. They also claimed Harris owed $35,000 instead of $23,000. It later apologised for its “negligent oversights.”
The Australian Securities and Investments Commission sued the bank for $150,000. The bank offered no defence regarding the suit and accepted the $150,000 fine.
Using credit cards for gambling is a subject under the spotlight. Australian bookmakers warned a blanket ban on credit card payments would hit the industry hard. Ladbrokes Australia’s chief executive Dean Shannon said it would effect 30% of Ladbrokes’ turnover.
The Australian Banking Association is considering a blanket ban on all credit cards being used for gambling transactions. Some banks already don’t allow credit card gambling. Macquarie completely banned its credit cards from gambling use. National Australia Bank made it possible to block gambling transactions in February. Its credit card users can lift the block after a 48-hour cooling-off period.
Bank Australia customers have until December 1 to use their credit cards for gambling purposed. The bank’s customers can still use their debit cards for gambling after this date, but their credit cards will not work.