New insight into how problem gamblers access money

An independent report examining how problem gamblers access money highlights the importance of the Australian Government’s gambling reforms, including limiting ATM withdrawals.

The Problem gamblers and the role of the financial sector report, by the South Australian Centre for Economic Studies, found that the first source problem gamblers turn to for money is their savings accounts, which they largely access through ATMs in gambling venues.

The report found problem gamblers tend to finance their gambling in the early stages by running down their savings and personal accounts. As problems escalate, problem gamblers commonly turn to joint bank accounts and home loan accounts to pay for their addiction, and borrow money from family and friends.

It is clear from this report that a person’s gambling addiction can have a significant negative impact on family and friends.

To help people take control of their spending, the Australian Government plans to introduce a full pre-commitment scheme, new electronic warnings on poker machines and to limit ATM withdrawals to $250 a day in gaming venues (excluding casinos).

We also want to protect problem gamblers and their families from facing additional harm through the provision of inappropriate credit.

The report found in some instances, problem gamblers will apply for new credit cards and take on other types of loans to keep gambling.

The Government’s new National Consumer Credit laws, which came into full affect at the beginning of this year, require lenders to engage in more responsible lending practices.

These include a duty to make reasonable inquiries about any unusual gaps in a borrower’s income and expenses, such as may occur if a person is over-spending on gambling.

Lenders and brokers must also assess the borrower’s capacity to repay the loan and check that the loan is suitable for the needs of the borrower.

In addition, proposed privacy amendments that are currently being considered by the Senate Finance and Public Administration Legislation Committee will introduce new comprehensive credit reporting requirements, as recommended by the report.

Subject to sufficient privacy protections being put in place, comprehensive credit reporting will enable lenders to see when a borrower has made multiple credit applications over a short period of time.

These consumer credit reforms provide important protections for all borrowers, and particularly problem gamblers and their families.

The Australian Securities and Investments Commission has also included case studies involving problem gamblers on their new MoneySmart.gov.au website, such as in their Love and Loans fact sheet.

The report also demonstrates that financial counsellors play a critical role in assisting problem gamblers to take control of their finances and work with financial institutions to resolve credit issues.

The Government is providing $28 million over four years in new investment from 1 July to continue 77 full-time financial counselling positions established during the global financial crisis. Since 2008, Australian Government funding for financial counselling has more than quadrupled, increasing from $2.7 million in 2007-08 to $15.3 million in 2011-12.

Commonwealth financial counsellors deliver free, confidential and professional counselling.

The Government is also providing $60.6 million over four years for financial literacy and microfinance programs delivered in partnership with financial institutions and community organisations.

These programs include:

• Saver Plus – a matched savings and financial education program targeted at people on low incomes to save for educational expenses, run by the Brotherhood of St Laurence in partnership with ANZ.
• NILS(R) and StepUP loans – zero- and low interest loans to help people on low incomes make household purchases, run by Good Shepherd Youth and Family Services in partnership with NAB.

The Government will also continue to provide funding to the national peak financial counselling organisation, Financial Counselling Australia.