Credit and Gambling - Letter to John Varley (previous Group CEO Barclays Bank)

Letter (and response) to John Varley then Group CEO of Barclays Bank on the topic of credit and gambling.

@GamblingHurts comments to Mr John Varleys reply.

1. @GamblingHurts respectfully disagrees with Mr John Varley on his point that many of his credit card customers are paying balances in full each month and therefore are using their own money. From the point of making a transaction using a credit card to the point when that transaction is paid off they borrow the banks money. Mr John Varley knows that which is why banks operate a credit scoring system to assess an individuals ability to repay.
2. It is unlikely that a bank would knowingly grant a personal loan to fund a gambling spree, so why should they view credit card transactions any differently. Prohibiting gambling transactions on payments cards where credit is being advanced to fund the transaction is in the view of @GamblingHurts a) responsible lending practice, b) commercially prudent and c) ethical.
3. The fact that an individual can choose to withdraw cash from a payment card using credit and then gamble that money does not detract from the case for preventing known use of credit to fund gambling.

-----Original Message-----
From: john.varley <email address deleted>
To: anthonyfranklin <email address deleted>
Sent: Tue, Jan 6, 2009 1:02 pm
Subject: RE: Irresponsible Lending Practise Complaint

Dear Mr Franklin,

Thank you for writing.

We take our obligation to lend responsibly seriously.  We believe we are generally an industry leader in this regard and continually look for opportunities to enhance our position, across all of our various consumer and commercial lending operations.

As a member of VISA, we do not allow the use of any of our VISA cards to purchase or sell goods and services that are illegal for either the buyer of goods or the seller, whether in the UK or outside.  You may also be aware that, in the UK, legislation does not allow gambling licensees to extend credit to UK consumers.  This has led to the common practice of casinos not accepting credit cards to fund gambling activities.  However, the use of cards to fund transactions on-line, and in what are called "card not present" transactions, has increased recently. In recognition of this, VISA has developed a series of regulations for its members that are designed to enhance their control.  These rules permit the identification of gambling activities and use of cards in a controlled manner.  Barclays operates its cards systems within this framework.

Prohibiting gambling transactions outright on any of our various payment cards would be extremely difficult to justify.  Absent legislation, we cannot stipulate how customers spend their own money - as you point out yourself.  While that consideration may appear to apply only to debit and pre-paid cards, it extends to credit cards as well, as millions of our credit card customers pay their balances in full every month.  In theory, we could prevent those who have historically not paid their balance each month (i.e., borrowed) from using their credit card for gambling-related purchases, but we have no specific information about each customer's intention to pay their bill in any particular month, so cannot presume if they intend to borrow the money for specific transactions or not.

 Even if undertaking such action was justifiable, it would be difficult for us to make it happen in practice.  First, we do not always know what transactions are truly gambling related.  It would not be appropriate for us to adopt a broad policy knowing we could apply it only selectively.  Second, if a customer has credit available on their credit card, we cannot stop them from simply taking a cash advance and spending the money on a gambling-related activity.  Even if the cash machine is on the premises of a gambling-related business, we cannot presume what the customer intends to do with the cash.

All of that said, as part of our efforts to maintain our market leading position on responsible lending, we will, in the near future, undertake a high-level review of how and when our credit card customers use their cards for gambling-related activities to see if there are any specific issues that we can identify and address.

Yours sincerely

John Varley
Group Chief Executive

Tel: 020 7116 xxxx (cw xxxx)
Fax: 020 7116 xxxx (cw xxxx)
e-mail address: email address deleted
Address: One Churchill Place, London E14 5HP
COMPANY CONFIDENTIAL

Anthony Franklin

email address deleted

John Varley

Group Chief Executive

Barclays Bank PLC,

1 Churchill Place
London
E14 5HP

2^nd January 2009.

Dear Mr Varley,

I write to you to ask for your leadership to work within the banking industry to discontinue a highly irresponsible lending practise of allowing gambling to be funded through borrowing, in particular the use of payment cards linked to any form of credit. (Credit Cards, Debit Cards linked to overdrafts etc.)

I quote a comment from a recent interview you gave in respect of the Global Financial Crisis when you said:

"If you look at the industry as a whole – if I speak as a member of the industry rather than as chief executive of Barclays – I absolutely have to say we should share our portion of responsibility."

I cannot think of a more extreme example of irresponsible lending than knowingly allowing borrowed funds to be used to place bets. There is no commercial sense to this type of lending, and in the long term debts of this nature are often non recoverable.

I do not seek to advocate a total block to payment cards (Debit cards, Pre-Pay Cards) being used to pay for gambling transactions as I believe people have a right to choose how to spend their own money. Clearly though the banking industry has an obligation both to its shareholders, and stakeholders including society as a whole, to ensure that it lends in a sustainable, ethical and responsible manner.

I hope that you can agree and that with your leadership Barclays Bank can immediately review this issue with a view to immediately discontinuing the practise of allowing credit to be accessed through cards to pay for gambling transactions.

I am happy to provide any further information that you need, I can be contacted by email at email address deleted, please feel free to review my website for further information at www.stopgamblinguk.org.uk.

Sincerely,

Anthony Franklin.