The Commonwealth Bank has admitted to offering repeated credit card limit increases to a customer who was begging them to stop because he had a gambling addiction and a $30,000 debt.
Michael Harris, a qualified roof tiler, broke down in tears on Thursday at the financial services royal commission when he described his experience with CBA and his fruitless attempts to get help.
He told the commissioner, Kenneth Hayne, that he had started gambling seriously with his first CBA credit card in 2015, and within a year he had obtained two more credit cards with CBA as his losses increased.
His first card had a $10,000 limit, his second a $7,000 limit, and his third a $8,000 limit.
Roughly a month after he opened the third account, he said, CBA had sent a letter to his house offering to increase the limit on his first card from $10,000 to $12,100, which he accepted. It took his aggregate credit limit to $27,100.
He then consistently maxed out all three cards as he chased his losses and tried to win enough to pay down his debts, but he never came close. “It was a ridiculously large amount of money for someone who was earning my wage,” he said.
He said during a phone call to the bank in April 2016 about an unrelated issued, he was asked why he had three credit cards and suggested he roll them on to one card with a lower rate of interest, which he did.
In October 2016, during another phone call, he was told he was eligible for another credit increase, which he refused.
“I explained I’m a gambler, I have a gambling problem, they can clearly see that I’ve got a gambling problem because of the transactions I’ve been making, and I don’t understand why they keep offering me more money,” he said.
He received a letter 10 days later offering him a credit increase from $27,100 to $32,000. Four weeks later, another letter offered to increase the limit to $35,000.
“I ignored it for around another month and a half or something,” he said. “[But] every time I was making transfers on my bank account, paying my rent or anything, it would come up [with a notice saying], ‘You’re eligible for a credit limit increase.’
“In January 2017 I increased it … I maxed it out within the space of a month to two months.”
He said he had borrowed $35,000 from his boss to pay it off, and he went to the bank with his boss to try to pay off the debt and close his account.
But the bank staff told him that he couldn’t close the account in the branch, he’d have to call someone on the phone. But then he was told on the phone that he couldn’t close the account over the phone, he’d have to do it in a branch.
Out of desperation he cut up his card, which stopped him from spending any more money on it for two to three months. But then he applied for another card and got it.
He then lodged a complaint against the bank. “Two of the hardest things you can do when you’re suffering from any addiction is to admit you’ve got a problem and reach out for help,” he said. “And in that phone call to Commonwealth I tried to do both.”
Harris became very emotional at that point, and Hayne told him to take a deep breath.
Harris said he had made a second complaint, and he was finally put in contact with CBA’s financial assistance team who agreed to knock off the interest and $10,000, after weeks of negotiations.
He began to pay down the debt in weekly instalments, which he has been doing for a number of months, but he is still receiving phone calls and letters from CBA pressuring him to pay down his debt.
“I told them they don’t need to contact me any more, I’m already making the agreement, this was after I’d already received a few letters telling me that I still need to send through more documentation,” he said.
“I don’t understand how they’re not communicating that the agreement’s already in place and it’s been paid for a couple of months … I’m still receiving letters now.”
He still owes $23,400 on the card.
Clive van Horen, Commonwealth Bank’s executive general manager of retail products, apologised to Harris for the experience and admitted to the commission that CBA needed to improve its credit card lending practices.
“We’ve acknowledged that we should not have provided that final credit limit increase offer,” Van Horen said.
He said when Harris had told a CBA staff member on the phone that he had a gambling problem the information was not passed through. “That’s a failing and we acknowledge that and we’ve got to find ways to address that,” he said.
In April last year CBA changed its practices so it no longer offers credit card limit increases to customers who are spending large amounts of credit on gambling activity, he said. Since December it had also been monitoring the use of debit accounts for gambling activity, because problem gamblers will often shift funds between credit and debit accounts.