MPs slam Lloyds promotion encouraging credit card gambling
MPs have called for senior executives at Lloyds TSB to be fired after the bank sent out letters suggesting that customers borrow to pay for gambling.
Lloyds' letters told borrowers that they would be able to use, "up to 50% of this [credit] limit for cash withdrawals and cash related transactions such as gambling, the purchase of foreign currency, money orders and gaming chips."
Many of the credit cardholders they contacted have high credit limits in the thousands.
One recipient of the letter identified by The Daily Mail had been given a high credit limit and encouraged to use it for gambling despite only earning £12,000 a year in his very first job.
The promotion recalls Barclaycard's decision to encourage cash withdrawals last year, a move widely condemned as irresponsible by consumer groups.
This time, by seeming to promote both borrowing and gambling, state-owned Lloyds has raised the ire of senior Members of Parliament.
Philip Hammond, Tory shadow chief secretary to the Treasury said that he was outraged by the promotion.
"It beggars belief that a bank so heavily reliant on public funds is promoting itself as a provider of credit for gambling habits," he said.
"Taxpayers who are on the hook for a bailout worth billions of pounds will be horrified."
Hammond called on Lord Myner, Financial Services Secretary and previously a director at Natwest to warn Lloyds against using similar promotions in the future.
Vince Cable of the Liberal Democrats agreed that action should be taken against Lloyds in this case.
"The senior management who signed this off need to be fired," Cable said, simply.
"It's quite extraordinary that a publicly owned company is effectively encouraging borrowers to gamble on their credit cards. It is exactly the type of stupid, irresponsible behaviour that has to be stopped.
Cable added that the existing customer promotion was even more breathtaking given that High Street banks have spent so much time explaining why they cannot lend to consumers and businesses who would have once been considered to have good or even excellent credit histories.
Borrowing to gamble
According to the Gambling Commission, 0.6% of the UK's adult population had a gambling problem in 2007, though charities such as GamCare estimate that the proportion is much higher.
Credit card debt is, of course, even more widespread: the average client of the Consumer Credit Counselling Service in 2008, for example, owed around £7,000 on credit cards as well as more money through multiple other forms of debt.
Together, it's clear, gambling and credit cards are likely to be a dangerous combination.
Many credit card providers charge high fees for gambling transactions such as playing the lottery or making transactions within a casino.
That's in addition, of course, to the potentially huge losses consumers could incur after borrowing money to pay for a 'safe bet' and being left not only with the bill but with a mountain of interest rate charges if it turns out not to have been so safe after all.