Unaffordable loan given to gambler
Benson's lender didn't make reasonable inquiries to check his loan was affordable.
Benson's lender didn't make reasonable inquiries to check his loan was affordable.
In 2021, Benson* arranged a loan with a balance of $15,212.40. In 2022, he topped up the loan, borrowing additional amounts of $5,000 and $14,000 respectively.
Later that year, Benson had a significant mental health event and his family subsequently discovered he had a gambling problem.
Benson made a complaint to the IFSO Scheme about his lender, with the help of a representative.
The IFSO Scheme investigated. Benson’s representative said that Benson’s loans were not affordable, and the lender did not make sufficient inquiries about the gambling sites that Benson was using at the time of each loan.
The representative provided Benson’s bank statements as evidence, showing substantial gambling activity increasing over the period that the loan top-ups were approved.
The IFSO Scheme found that, when the lender checked the affordability of Benson’s loans, it obtained bank statements for the joint account his salary was paid into, but didn’t get bank statements for the account used for the loan. There was very little gambling activity in the joint account Benson’s salary was paid into. He used the other account for gambling, so it was not visible to his wife.
Following discussions, the lender offered to settle the complaint by reversing all the fees and interest charged on the loan to date and allowing Benson to pay the remaining balance over a term of 60 months, at zero interest. Benson accepted the offer.
Complaint upheld
*Name has been changed
Lenders are required by law to make reasonable inquiries about whether borrowers will be able to meet their payments without suffering substantial hardship.