24 January 2019 - Minutes of the meeting of the Board of Commissioners

Location: Victoria Square House, Birmingham (Boardroom).

Commissioners:

• Bill Moyes (Chair)
• John Baillie
• Carol Brady
• Stephen Cohen
• Alison Hastings
• Sarika Patel
• Simone Pennie
• Jonathan Scott
• Catharine Seddon

In attendance:

• Ben Barter
• (REDACTED)
• Nicky Heathcote
• Paul Hope
• Philip Lloyd
• Neil McArthur
• Tim Miller
• David Pemberton
• Oliver Sweeney (Legal)
• Helen Venn
• Richard Watson
• (REDACTED) (notes)
• (REDACTED) (item 3)
• (REDACTED) (items 5 and 6)
• (REDACTED) (item 6)
• Helen Rhodes (items 6 & 7)
• Teresa Camey (item 8)

Apologies:

• Trevor Pearce
• Vic Beaumont

Welcome, apologies and declarations of interest

There were no new declarations of interest. Bill Moyes welcomed Ben Barter as interim Head of Governance.

1. Minutes, actions and forward look

The minutes of the meeting held on 6 December 2018 were approved, subject to the following amendment to item 2.1, bullet point 3:

• amend from: ‘that the Executive should develop a proposition for a fee review, for further consideration by the Board’ to ‘that the Executive should develop a proposition for further consideration by the Board. This should be a sustainable proposal, to mitigate the requirement for ongoing review by the Board’.

The rolling actions were reviewed, and updates agreed.

The Board noted that work on the fees health check has started this week and will be completed by the end of March 2019. The Board will be updated in due course.

The forward look was not reviewed at the meeting but was later reviewed and updated by Governance.

The Board formally agreed the appointment of (REDACTED), as independent member of the Audit and Risk Committee, as per paragraph 33 of Appendix 2 of the Corporate Governance Framework.

2. Chair’s business

Chair’s external meetings

The Board noted the following meetings Bill Moyes has attended since the last Board meeting on 6 December 2018:

The Chair and CEO of Senet, Gillian Wilmot and Sarah Hanratty

A well received introductory meeting took place in December 2018 together with Tim Miller.

Lord Chadlington

A good meeting took place, together with Neil McArthur, with a lot of common ground shared on gambling and advertising related matters, with positive discussion of two-way support going forward.

DCMS Minister Mims Davies

As per the previously circulated note to Board, the meeting was positive and productive.

Simon Stevens, CEO, NHS England

A productive meeting was held and the Commission’s Comms team have been in touch to follow up on a number of issues, including opportunities to collaborate with Public Health England in order to enhance information on NHS websites, helping both gamblers and people who are drifting into gambling. It was agreed that a list of a range of speakers be identified to talk to the Board about treatment options.

Action: Ben Barter to coordinate a list of potential Board speakers for consideration.

National Lottery Operator’s Board Effectiveness Review (BER)

Nicky Heathcote highlighted the key points in the paper and correspondence shared with the Board. The Board held a detailed discussion regarding the information provided as assurance.

The Board agreed an appropriate level of assurance had been provided and approved the recommendation in the paper to close the Licence Condition 17 process.

The Board agreed a review of the Operator’s associated Action Plan should be completed as part of the Commission’s BAU work and that the outcome of the BER should be summarised in the Commission’s 2018/19 Annual Report.

To provide ongoing assurance, the outcome of compliance work will be shared with the National Lottery Committee on a periodic basis. Any concerns to be escalated to the Operator’s Chair.

The Board highlighted the need for the Operator to provide high quality proposal submissions when seeking regulatory decisions. It was confirmed this is a critical consideration within the regulatory approvals process.

Action: Nicky Heathcote to draft a letter from Bill Moyes to the Operator’s Chair advising him of the Board’s decision that the Licence Condition 17 process is now complete.

GC Board Effectiveness Review (BER)

The Board noted a review of compliance against the new UK Corporate Governance Code which came into effect in January 2019 has been completed. Whilst there is no legal requirement for the Commission to comply, the Code is best practice. The Commission showed strong compliance, however there are a small number of recommended actions which will help strengthen our governance. The Board agreed to consider these via correspondence.

Further compliance assessments against Cabinet Office and Regulator Codes will be undertaken by Governance.

Deloitte have been appointed to undertake Phase 2 of the BER work and there will be interviews with a range of stakeholders in February and March 2019. Deloitte will attend February 2019 Board to observe (post meeting note: this observation is now scheduled for the March 2019 workshop and Board meeting).

Action: Nicky Heathcote to circulate the review of compliance against the UK Corporate Governance Code to Board for approval via correspondence.

3. CEO’s quarterly report

The Board noted the CEO’s quarterly report, in particular the following points:

Board Performance report

Overall, steady progress is being made in terms of performance and delivery of the strategy. There is stabilisation in terms of staff turnover and sickness rates, however, an increase in compliance and enforcement casework is evident. The Board raised queries in regard to the materiality of improvements to staff turnover and sickness rates; the recent issue regarding a specific operator’s approach to non-disclosure agreements; our response to issues reported in the media regarding GamStop.

Action: Vic Beaumont to provide a reminder on the target for reduction in sickness absence as agreed previously with RemCo and Board and the date by which we intend to meet that target.

Performance in each business area was then summarised by the relevant Exec Director. The Board noted that given there is no meeting aligned to the date of the next scheduled update, the Board Performance Report should be shared in the Reading Room.

Action: (REDACTED) to share the Q4 2018/19 Board Performance Report to the Diligent Board Reading Room in April.

Corporate Risk Register: the top risk remains maintaining progress around the National Lottery Competition. Audit and Risk Committee are reviewing the same Register at their meeting in February 2019, subject to any changes made in the interim. Following on from a broad discussion it was agreed that further items would be shared with Board to support the core content of the Corporate Risk Register.

Action: (REDACTED) to develop outputs in support of the Corporate Risk Register which outline how our assessment of each strategic risk has both moved over time, and currently relates to the Board’s risk appetite. This is to be shared with Audit and Risk Committee initially, and then with the Board by correspondence.

The Board noted the paper on EU Exit and the risk assessment of ‘no deal’ scenario. It was reported that all risks are under control to the extent that they are controllable at this point, given the current level of political uncertainty at present. Board will be advised of any material developments to the contrary.

4. Finance Report

The Board noted the Finance Report, this month reported in two parts, sections A (for approval) and B (Finance Report to December 2018).

The Board approved the proposed changes to the delegated authority policy as outlined in paragraphs 15-19 in section A of the paper, subject to an amendment to be made as follows:

• the Chief Executive acting together with a Commissioner has the authority to refund any regulatory settlements received in error when the regulatory settlement, whilst agreed with the Commission, is payable directly to a third party
• the Chief Executive acting together with a Commissioner has the authority to refund any monies received in error and unconnected with any action by the Gambling Commission back to the payee
• the Chief Executive has the authority to pay any financial penalties received from operators directly to the Consolidated Fund.

5. Responses to Licence Conditions and Codes of Practice (LCCP) consultation, proposals to strengthen online age verification and identity checks

The Board noted the paper presented by (REDACTED), with particular discussion and consideration around the timescales for implementation and separately, third-party verification checks. A wider discussion was also held regarding the optimal volume and flow of consultations.

The Board approved the following three recommendations:

• the proposals for changes to LCCP, as amended in view of consultation responses
• that we implement the changes to LCCP by May 2019
• that we therefore publish the outcomes of the consultation by early February 2019, so that the industry has three months’ notice of our final position in respect of LCCP
• that Exec Group will sign off the response document.

6. LCCP amendments and calls for evidence

The Board noted the paper and next steps, noting that the steps as a result of the call for evidence on credit might be implemented as early as 2020 but not in 2019.

The Board approved the package of work to:

• consult on amending LCCP to require licensees to use only ADR providers that meet our additional standards
• consult on amending Social Responsibility (SR) Code 3.4.1 and Ordinary Code 3.4.2 (customer interaction) to raise standards and prevent harm to consumers.
• launch a separate call for evidence on player protections on all Category B gaming machines
• launch a call for evidence on the risks of harm associated with gambling with credit cards.

7. National Responsible Gambling Strategy

The Board noted the update, in particular:

• the strategy will be published in April 2019. Helen Rhodes will come back to Board in February 2019 with a further update, and again in March 2019 for Board to sign off on the strategy
• engagement and responses to date have been positive
• we have support from DCMS Ministers and have been working with them to keep them well informed
• there was a broad discussion around the ten recommendations noted in the report, with the consensus that we need to ensure clear ownership for each recommendation and focus on a clearly set out plan of the ‘how’ and the ‘who’.

The Board approved:

• the publication of the RGSB advice prior to the final strategy publication.

8. NLCC update

The Board noted the paper.

9. Review of the meeting

The Board noted the improved quality of papers and presentations, which better focused on and clarified key issues and items for Board approval.

It was noted that it had not been clear that the workshop afternoon break had been arranged to coincide with the Digital Advisory Panel workshop break to provide opportunity for both parties to interact. Any similar Board engagement during a break should be more clearly outlined on the relevant agenda.

The Board agreed that the risk matrix should be debated in more detail going forward and that the Board Assurance Framework should be discussed and reviewed in depth, at least annually. This should be brought to Board with a summary of assurance from Audit and Risk Committee.

10. Any other business

Bill Moyes advised the Board of his recent meeting with Lord David Currie, Chairman, Advertising Standards Agency, with whom he meets twice a year. There were no particular issues to report.