The UK Gambling Commission (UKGC) has announced that it is ready to implement a “streamlined approach to identifying high-risk customers” via the application of Financial Risk Assessments (FRAs).
This morning, the Commission hosted separate briefings confirming to UK gambling operators and the media that it was ready to apply a “staged approach” to the introduction of FRAs.
Speaking on the call, UKGC interim CEO Sarah Gardner explained that the staged approach is backed by “our board has now decided the case has been made to introduce FRAs, but also has listened to the feedback from consultations”.
The use of the FRAs is maintained as a principal measure of the Gambling Review White Paper, and in light of pilot testing, the Commission views that “there is evidence that some high-spending gambling customers are experiencing current financial difficulties but are not being identified or supported by gambling businesses.
Gardner commented: “High-spending customers are between two and four times more likely to have a debt management plan and between two and five times more likely to have a default in the previous 12 months than consumers in the wider population.
“Without being identified, they may continue to receive marketing and promotional offers encouraging further gambling despite being financially vulnerable.”
The interim CEO also reaffirmed that the FRA programme maintains the overriding target of 3% of checks of customer accounts, in which assessments are undertaken via Credit Reference over the use of personal documents – “which consumers don’t like”.
The Application
In response to consultation concerns, the Commission will proceed with a “carefully thought-out staged application” of FRAs and its practices.
The first phase of the FRA programme will apply to the “largest operators” focused on the assessment of high spend customers with a check set of £5,000 net deposits accumulated over a 24-hour period.
The Commission views the starting threshold of £5,000 as an “unusually high spend pattern that less than 0.5% of customers exceed”, allowing operators to settle into the new guidelines.
Interim stages of implementation will be set “following further engagement with implementation groups and stakeholders”. Meanwhile, the final stage will focus on over 25s who have net deposits of over £1,000 in a rolling 24-hour period, or exceed a £3,000 net deposit in a rolling 90-day period. For under 25s, this is reduced to £750 and £2,000 respectively.
Operators will be informed of a finalised timetable on the application of FRAs, which will be established via discussions with industry and stakeholder groups during the summer.
Regardless of a customer’s spending level, the Commission expects operators to identify those who may be at risk of gambling harm and take proportionate action.
This may include reducing marketing, encouraging deposit limits, or implementing stronger interventions where necessary. The GC maintains that operators must ensure Know-Your-Customer (KYC) duties irrespective of the FRA application.
No operator penalties during early stages
Embedding the first stage of the FRA application, the Commission will take no enforcement action on a failure to act following an assessment.
However, online licences will remain fully accountable for complying with all existing licence conditions and regulatory obligations, with enforcement action taken on wider breaches of duties.
This was confirmed during the press call, where Gardner admitted that, albeit unusual for the Commission or any other regulator, it will not take any enforceable action where operators have failed to act on the back of an FRA.
Helen Rhodes, Commission Director of Major Policy Projects, highlighted that the decision was made in response to industry concerns and with minimum customer journey disruptions in mind.
“We wanted to listen to operator concerns about Commission potential compliance enforcement expectations,” Rhodes said.
“It’s really important that this is implemented in a way that is smooth for consumers and doesn’t unnecessarily disrupt their journey. This approach allows us to build up gradually and ensure that operators don’t reintroduce unnecessary friction or document checks for consumers.
“That of course doesn’t mean existing requirements will still continue to apply, and enforcement action could be taken if existing requirements are not met, and that’s really important to maintain the existing consumer protections that are there for consumers when other types of risk are identified.”
Not a question of “serve” or “don’t serve”
Gardner took time to ridicule some of the headlines surrounding the FRA implementation, with some “incorrectly presenting it as a binary choice of whether to keep serving the customer or not”.
Instead, she added that there are other options to support customers once they are flagged by an FRA, such as reducing targeted marketing and operator deposit measures.
Additional details around the agreements in place with credit reference agencies and gambling operators will be discussed over the summer to work towards the final stage of implementation.
Concerns of consumers “at the heart of everything we do”
The Commission also confirmed that they have listened to the concerns of consumers and punters, who are said to “remain at the heart of everything we do”.
Executives at the regulator acknowledge that affordability checks are “deeply unpopular with consumers” and are not set to be implemented.
Rhodes continued: “We did have a call for evidence about the theme of affordability checks, but what we are implementing here is a far more targeted, precise measure to support consumers who are in significant financial difficulties. When we talk to consumers, as we did through our consumer research, they understand that measure and that approach, and they begin to understand why it might be necessary and proportionate.
“We also spoke to consumers with lived experience of gambling harm, and they talked about how a measure like this might have identified and offered support to them at an earlier stage of the customer journey that would have reduced the amount of harm that they suffered as a result of gambling.
“We care about consumers for each of those sectors, and that’s why it’s really important that we roll this out, but we have taken a very proportionate approach. This is really targeted at very high spending consumers. A lot of consumers have been confused by some of the coverage, where I think they’ve been led to believe that this is applying to consumers. This is really not the case.
“The vast majority of consumers will never undergo an assessment, and those who do will largely experience this in a frictionless manner. Where financial difficulties are identified, it is appropriate to consider support that should be offered to those customers, and we’re confident we’ve taken an appropriate approach that builds on consumer views that we have continued to be interested in throughout this process.”
The Commission was questioned about the fact that the 2023 Gambling Act Review White Paper was a product of a previous government.
In response, it confirmed that it has the full backing of the current Labour government which is now in power.
“We’ve been really careful to check that the current government remains committed to what is outlined in the White Paper, and they’ve confirmed that they are,” Gardner explained.
Article contributions by Patrick Killeen and Viktor Kayed