Author Mark Richards

Credit card companies are increasing their limits for people struggling to manage their money. As online gambling increases, more and more people are at risk of a gambling addiction. Should we crack down on the companies involved? Or is there a better, long-term way to solve the problems?

The welfare state is famously there as a safety net – a recognition by society that there is a basic standard of living to which everyone is entitled.

Of course, whatever standard of living you have you always want a little more, even if you are finding it difficult to live within your means. And it now seems that some credit card companies are specifically targeting people struggling to make ends meet – and giving them unsolicited increases in their credit limits.

A new report from the charity Citizens Advice – which helps thousands, if not millions, of people with debt problems – has said that one in five people struggling with debts has seen their credit limit automatically increased – a higher proportion than for cardholders in general. The figures were 18% for those in financial difficulty – compared to 12% overall. Now the charity is calling for a ban on these automatic increases, saying that they should only be allowed with the cardholder’s specific consent.

As we wrote earlier this year, around 3.3m people in the UK are in persistent debt, with the Financial Conduct Authority stressing the fact that such customers are profitable for credit card companies, who do not routinely intervene to help them or offer advice.

Maybe one option is to halt the steady decline in the use of cash – which could be making it even harder for people to control their money. Say what you like about cash, it is easy to manage: you cannot spend what you do not have. And as the old saying goes, ‘if you pay cash it is expensive: if you can get credit, it is free.’

Online gambling. When the fun stops, stop

Let us now turn to another area where the vulnerable are apparently being exploited, and where there will inevitably be calls for tighter regulations.

If you have watched any sport on TV over the past year you cannot have failed to notice the explosion in gambling ads.

There has been a big expansion in online gambling of late – as shown by results from the bookmakers Ladbrokes-Coral who have a chain of UK betting shops. The company’s results were good, but the improved profitability came not from the high street, but from a big rise in online gambling – with net revenue up 17% to £374.5m. In contrast, net revenue on the high street fell 6% to £697m.

Online gambling

In the old days, someone wanting a bet had to go into a betting shop. Today, thanks to mobile apps, you can gamble wherever you are. ‘Tap, tap, boom’ as one company’s slogan puts. ‘Tap, tap, addiction’ as it is becoming for all too many people. Every bookmaker’s ad on TV ends with, “when the fun stops, stop.” An increasing number of people are finding that the fun has stopped – but they cannot stop.

It is now estimated that Britain’s obsession with online gambling is a £2bn a year business: hard-core gambling addicts are estimated to have doubled to 500,000 over the last six years, with a further million people in danger of becoming problem gamblers, with increasing numbers of women also gambling online.

Dr Henrietta Bowden-Jones, founder and director of the National Problem Gambling Clinic, said more women are gambling than ever before.

“The proliferation of online gambling has brought into the home an activity that was historically male-dominated and on the high street.”

Protecting the vulnerable?

So should online bookmakers do more to protect their vulnerable customers? Absolutely, according to Sarah Harrison, chief executive of the UK Gambling Commission. “Safeguarding consumers is not optional,” she said, as the UKGC handed out a record £7.8m penalty to online firm 888 for failing to protect vulnerable customers, citing ‘significant flaws’ in the company’s social responsibility processes, which aim to protect consumers from gambling-related harm.

How reassuring to know, then, that Parliament keeps a close eye on the gambling industry, making sure that the industry acts responsibly and that the vulnerable are protected.

Oh, hang on…

The latest register of MPs’ gifts, benefits and hospitality has just been published, with MPs required to declare all donations and hospitality worth more than £300 (so a £250 dinner does not have to be declared, for example). The biggest donors to MPs were – prepare to be astonished – sports and bookmakers. Out of 187 donations from UK sources registered by MPs, 58 were from sport and a further 19 from bookmakers, with Ladbrokes Coral appearing 15 times – more than any other donor. The company said it wanted MPs to take decisions “from a position of knowledge.”

Useful learning opportunities given to MPs included trips to Ascot, Doncaster and Cheltenham races, the Community Shield at Wembley and a dinner at the Conservative Party conference. And if you live in Shipley in West Yorkshire you can relax in the knowledge that your MP, Philip Davies, is especially well-informed. He led the way in the Hospitality Handicap, declaring gifts worth £7,475.

Maybe the answer is not more legislation?

The obvious, instant answer to both these problems is more and tighter legislation. But as we have written many times, you can legislate supply, you cannot legislate demand – whether it is for credit or for added excitement when you are watching football.

Besides, doesn’t every business have a right to maximise its areas of profitability? Is what the credit card companies and the bookmakers are doing really any different to shops on the high street enticing us with special offers, or Amazon putting a list of ‘buy now with 1-Click’ recommendations in front of us?

The best form of defence has to be more financial education. Yes, there will always be people who struggle to manage their money, just as there will always be people who struggle to control other forms of damaging behaviour like gambling, but the answer cannot simply be ever-tighter legislation. We live in a global, connected world and our legislators cannot control every company in that world. Yes, we do need a financial safety-net: but in the long-term that financial safety net will come from more financial education and more help for the vulnerable.