Court fines CBA over ‘irresponsible’ offer to problem gambler

THE Commonwealth Bank has been fined $150,000 after increasing a customer’s credit card limit even though he had warned them he was a problem gambler.

The Federal Court heard the bank had already lifted customer David Harris’s limit before offering to do it again during a phone conversation in

October 2016. However, Mr Harris had 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,” Mr Harris said.

“I think that it’s pretty bad of them to offer me that when I clearly have a gambling problem.” CBA did not formally record his admission or pass it on to its credit decisions systems.

Ten days later Mr Harris received 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.

Mr Harris took up the offer, ran up a balance of $35,706.91 then failed to make a minimum repayment of $699. Justice Murphy found CBA breached responsible lending provisions and gave four reasons, including that it failed to make reasonable inquiries as to whether Mr Harris still considered himself a problem gambler.

“If he (Mr Harris) 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 six to seven days a week, in physically demanding work as a roofer.”

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 financial services royal commission.

The law has since been changed and unsolicited credit limit increase offers are now prohibited.