7 December 2023 — Minutes of the meeting of the Board of Commissioners

Minutes of the meeting of the Board, Thursday 7 December 2023.

Location: Remote Meeting via Microsoft Teams

Commissioners:

• Marcus Boyle (Chair) (MB)
• John Baillie (JB)
• Lloydette Bai-Marrow (LBM)
• Stephen Cohen (SC)
• Charles Counsell (CC)
• Sheree Howard (SH)
• Claudia Mortimore (CM)
• Trevor Pearce (TP)
• Andrew Rhodes (AR)
• David Rossington (DR)
• Catharine Seddon (CS) (from 15:20, via Teams).

Executive Team:

• Helen Child (HC)
• Lucy Denton (LD)
• Sarah Gardner (SG)
• Helen Gibson (HG)
• Natasha Harris (NH)
• Tim Miller (TM)
• Alistair Quigley (AQ)
• Kay Roberts (KR).

Workshop facilitators: REDACTED

Other participants: REDACTED

Apologies: REDACTED

1. Board only workshop with Telos Partners (not minuted)

2. Welcome, apologies, introductions and declarations of interest

The Chair welcomed attendees to the meeting and noted that the Board pack was significantly shorter than previous packs, which was welcomed.

Apologies were noted from HD, HP and JT, and CS will be joining the meeting at around 3pm, due to other commitments.

Declarations of interest were noted from REDACTED and REDACTED as below:

• REDACTED
• REDACTED.

3. Minutes, Actions, Forward Look and Board Effectiveness Review (BER) action plan

The minutes of the following meetings were approved as a true and accurate record:

• 15 August extraordinary Board call
• 11 September extraordinary Board call
• 18 October extraordinary Board call
• 28 September Board meeting
• 16 November extraordinary Board call.

REDACTED commented that the forward look is somewhat shorter in terms of items for meetings and it will be kept more focused on core areas of work, with drafting of a revised version of reserved powers for the Board. The Gambling Act Review and Corporate Strategy will be key items for the next few meetings.

There were no comments on the actions log.

There were no comments on the BER action plan.

4. CEO’s report

The Board noted the report for information.

AR drew the Board’s attention to some specific points:

• the staff Great Place to Work (GPTW) results were a huge improvement and the big jump was largely due to improved results in Operations. There is scope to improve further, and pay and stakeholder perception are likely to remain challenging for us as a public body and a regulator, but really pleased with the positive movement
• on the White Paper, we have done everything when we said we would and we were singled out for praise yesterday in the Minister’s speech at the GambleAware conference
• there has been a lot of engagement with stakeholders and the recent CEOs’ roundtable was very constructive
• on our letter to the Chief Coroner, which proposed the development of an agreed protocol for the Commission’s involvement in inquests where the gambling is cited as a possible contributing factor, we are trying to establish how we can become involved and need to be very clear on our role. We will need to ensure we stay aligned with Department for Culture, Media and Sport (DCMS) on this issue.

Commissioners asked questions and made comments:

• REDACTED
• on benchmarks for GPTW, comparison with private sector bodies is not necessarily helpful; could we consider other comparators? It was noted that the Commission – along with other arms’ length bodies - had been removed from the Civil Service survey several years ago
• REDACTED
• REDACTED.

5. Introduction to Nick Rust, Chair, Industry Forum

The Chair welcomed the recently appointed Chair of the Industry Forum to the Meeting.

The Forum Chair thanked the Commission Chair for inviting him to today’s meeting and gave the Board a brief overview of his career. He set out his vision for the Industry Forum, and was clear that it is not intended to be a replacement for trade bodies, and he hoped the Forum would enhance policy formulation by focusing on improved relationships to tackle common challenges. The Forum Chair emphasised he will focus on building trust in the coming months which will be key to running a successful Forum.

Commissioners asked questions and made comments:

• on any barriers to success in the Forum Chair’s role, a barrier would be if we did not recruit the right set of people and were not seen as credible. The Forum Group has to support the Commission and its work – it is absolutely not a vehicle through which to lobby DCMS. The Forum will be constructive and challenge where necessary but in the right spirit as a frictionless support
• the gambling sector is very wide, so how do smaller sectors get heard. The Forum Chair wanted to avoid the representation operator model of the ‘top 10’ operators; there may be opportunities for smaller operators to liaise with each other.

6. Chair’s report

The Board noted the Chair’s report for information.

The Chair briefly introduced his report and highlighted that the Commission had hosted the latest Chairs’ roundtable yesterday, which was a cooperative meeting, with Chairs raising whether we should do a study on the illegal gambling market.

Commissioners asked questions and made comments regarding the potential conflict between the licensing objectives and the industry perception of the Regulators’ Code growth objective. It was confirmed that the Commission’s role in enabling growth is to create a level playing field and to take action against illegal gambling, which threatens licensed operators.

7. Corporate Strategy (CS)

The Board noted the report for steer and decision.

The Chair commented that Commissioners should focus on the destination of the CS rather than the journey, when asking questions.

The Board received a brief introduction to the item:

• in June this year the Board agreed on a 3 year CS, in September the Board looked at a draft outline of the CS and if agreed today, this would form the basis of the detailed planning (there is a current working draft of the CS in the BI Board Reading Room)
• building on the Board’s steer in September to include the theme of transparency as a strategic priority, we are today requesting a particular decision and otherwise a steer on the overall content.

Commissioners asked questions and made comments:

• there was support on as much transparency as possible
• the difficulty of creating a rating system for compliance was understood, but it is the right thing to explore it
• our aspiration to achieve excellence in financial forecasting and governance should be included within the relevant objective
• the importance of outcome focused language was stressed; this will allow the Commission to signal the ambitions we have and give stakeholders assurance that outcomes have been achieved
• metrics to underpin and measure our ambitions on data were needed
• the top risks and opportunities of achieving or failing to achieve the strategy should be set out for Board to review and monitor.

On the metrics, they are headline strategic outcomes and some are easier to measure than others. In some areas the metrics we propose are still subject to discussion and alternatives may arise as in some areas we do not currently collect data in the manner required.

Post meeting note: Commissioners received more details on headline strategic outcomes.

The Board approved the 2 suggested proposals for our future compliance and assurance approach should be included in the CS, as below (taking into account comments made by the Board today on more ambition around some of the language, further work on metrics and how do we manage risk, enablers and prioritisation on resourcing):

• published ratings system: to include in the strategy our intention to explore how we can implement a published ratings-based compliance approach. This would identify and report the assessed compliance level of specific licensees
• compliance snapshots: as an interim step whilst the above is design, we rework how we record the data currently collected from compliance assessments and use it to start publishing regular compliance snapshots of our findings broken down by licensing objective. These snapshots would not initially name licensees nor provide like-for-like comparisons. They would however over time build a picture of compliance findings in the industry and provide the first ever routinely published information on our compliance work.

On next steps, the Board will see a near final draft version of the CS at its next meeting on 8 February 2024 and a final version at its March meeting, together with the budget and business plan.

8. Expert Groups

The Chair welcomed the Chair of the Advisory Board for Safer Gambling (ABSG) and Lived Experience Advisory Panel (LEAP) members to the meeting.

The Chair introduced the ABSG Chair to new Commissioners and invited her to give feedback on the strategic priorities and metrics proposed in the Commission’s CS.

The ABSG Chair shared key thoughts on the CS so far.

• ABSG felt there was not enough about safety and harm reduction in the current draft
• on transparency, there should be the ambition to publish more and to collaborate with other agencies such as the Financial Conduct Authority and Advertising Standards Agency, whose emphasis is on data sharing, spreading out to the regulatory community worldwide in terms of intelligence
• we should make use of comparative data to drive up standards – no industry board will want to see their report card as being worse than the competition
• we need to make it clear that our ambition is to reduce the ratio of operator profit from high-risk consumers – the strong evidence that this is happening needs to be addressed
• there should be 3 organisational principles for the Commission as a regulator: transparency, proportionality and trustworthiness.

LEAP members thanked the Board for inviting them to attend today and highlighted the following:

• had a wrap up meeting today on what has worked well and how LEAP has changed perceptions, which is really positive
• would like to think that LEAP has come across well and shows that the lived experience voice can be well organised and coherent, as evidenced by the contributions to the GAR
• it has, on occasions, been problematic that LEAP members have not always felt as integrated with the Commission as the other Expert Groups and have been invited to give advice once decisions have been made, so for new members joining LEAP better integration and more engagement at an earlier stage would be welcomed (for example to be more involved at the start of projects with transparency and collaboration)
• it has seemed at times that there has been a subconscious reluctance to get LEAP involved but this view is changing – the LEAP voice is not a negative one, but a constructive and challenging one.

The ABSG Chair reinforced the importance of collaborative work, tackling a problem together in a more joined up way. The ability to combine academic research and real life experience that gives power to policy change.

REDACTED

REDACTED

It was formally noted how great an impact LEAP has had at the Commission. It is very clear where LEAP’s advice has made a difference and the way in which LEAP has applied lived experience to the challenges has been invaluable. We have taken the point on board of not involving LEAP at an early stage and that has really changed our way of thinking.

The Chair and CEO formally thanked those LEAP members leaving for all of the pioneering work they have done. REDACTED concurred and said the LEAP work achieved is a real credit to each and every LEAP member.

9. Chair’s debrief

This item was covered under the Chair’s report.

10. 4NL update

The Board received a verbal update on 4NL.

REDACTED

Commissioners asked questions and made comments.

REACTED

11. Gambling Act Review (GAR) update

The Board noted the paper for decision.

The team was formally thanked for all of the great work being done on the GAR, with the DCMS Minister highlighting all of their good work in his speech at the GambleAware conference this week.

The Board received a brief update:

• we are seeking the Board’s approval today on 2 specific areas:
1) age related, think 21 to think 25

2) financial vulnerability checks (which we are slightly decoupling from financial risk checks, for the purposes of clarity)

• on financial penalties, this will be published in the second tranche before Christmas (financial reporting having been signed off but financial penalties still to be signed off by REDACTED, as Counsel had asked for a final review of wording to mitigate some legal risks).

Commissioners raised questions and made comments:

• on financial vulnerability checks, and the possible risk of confusion between that and financial risk assessments, we will ensure we are very clear on that – they sound similar but we will be as clear as possible and we will address that inherently in the comms. We will also be able to say that many operators already undertake these checks so this is not novel
• we may need to convene additional Board meetings to ensure consultations are not unduly delayed by the fixed timetable of meetings
• on the level of burden on the industry coming out of so many consultations, we will look at every policy proposal and also look at the implementation and timescale for each one. Operators do favour consultations in a tranche, however, we cannot influence how DCMS phase their handling of consultations
• REDACTED.

The Board approved:

• the 2 recommendations set out in the paper in relation to age-related proposals and financial vulnerability checks, delegating authority for drafting and publishing and response document content to the relevant Executive Team member.

12. Finance and performance

Quarter 2 (July to September 2023) performance report

The Board noted the item for steer.

The Board received an update on the item:

• appreciate that the quarter 2 (July to September 2023) performance pack is quite out of date, especially in the 3NL space, with reference to the people risk and deliverable detail. This is due to the phasing of meetings but we have worked with Governance to resolve that issue ongoing
• this is the same pack that goes to the Executive Team with the exception of the inclusion of a key headlines section at the top of the paper
• this paper also includes details of the quality assurance processes in the different Ops teams to provide the Board with assurance on quality assurance processes.

Commissioners asked questions and made comments:

• this remains a very long pack, but the aspiration is for a shorter, more focused iteration from quarter 4 (January to March 2024)
• the pack now includes data from the forensic accounting team
• figures in Operations have not improved as dramatically this time around due to the fact that quarter 1 (April to June 2023) was exceptional
• there are over 30 firms listed who were late in filling out their regulatory returns –operators are given fourteen days to pay and if that does not happen then the non-payment goes to enforcement. We do not have the power to issue immediate fines, but we can do more do change the culture and get more evidence from the data
• on vacancies, we are at the highest headcount ever and recruitment is still increasing. A lot of the vacancies now are for new roles, not backfill. In the report, it shows that the number of people in post is 330 with an aim of 395. As at the end of November, 368 people are in post and we expect a headcount of 405 by the end of the financial year. Board members agreed it would be helpful for Board to have a line graph to show growth
• the Chair asked if the team were confident with the quality of the metrics and processes and was advised that the numbers are system generated so they are reliable
• the Chair also pointed out the red rating on cyber security and was advised this has now been resolved. The red rating was due to a piece of end of life equipment not being replaced (due to supply chain issues) and due to the Commission’s zero tolerance approach to end of life equipment it was flagged as red.

Financial report

The Board noted the financial report for information.

The Board received an introduction to the item:

• the P7 finance report is as at the end of October
• the budget has now been updated to reflect the supplementary estimates position, which was the P6 forecast
• the surplus shows a reduction of £108,000 compared to the revised budget, which mainly relates to staff expenditure. The good news is that we are making progress on our recruitment
• licence fee income is recognised from the anniversary date in November and we did not see a significant drop in October so can give assurance for this year and the first half of next year in terms of revenue from licences
• our debtors position has jumped up significantly to £1.5 million, which is mostly due to late or non-payers of licence fees
• operator applications are down, and we have cleared a lot of the backlog.

Commissioners asked questions and made comments:

• there are no surprises here, it is a continuation of the picture we have had all year which is very positive
• REDACTED attended a meeting, together with the Commission’s Finance Director, with DCMS on fees and the revising the fees model. The meeting went very well and there is now agreement at a working level that the Commission should start considering alternative options which is what is needed at this stage and is very encouraging
• the synchronisation of renewals of licence fees would require primary legislation
• for 2023 to 2024, we set the aspiration of a 1 percent variation between budget and actuals, and it is really pleasing to be at just under 1 percent. A big part of that result is the Executive Team getting involved in discussion with the Finance team and also working with licensing to identify a number of non-payments
• a clearer pictorial representation of the finance data would be helpful for new Commissioners.

Corporate business planning

The Board noted the item for steer.

The Board received an update on the item:

• we have been running the corporate business planning in parallel with the development of the CS and have been engaged with the Executive and their leadership teams to identify what activity will take place over the next 3 years in order to deliver the commitments in the CS
• the framework and process described in the paper is the same as last year
• the next stages will be to categorise and prioritise the potential list of deliverables so that we have not only an ambitious plan but also a realistic 3 year view of planned activity that can be fully costed
• we will come back to Board at its meeting on 8 February with the first draft of the plan itself and budget and then again at the Board’s meeting on 19 March with the final draft and budget for sign off by the Board.

Commissioners asked questions and made comments:

• this year’s business planning process has worked well compared to previous years and in particular a good choice has been taken by the Commission to avoid allocation to contingency, as well as the Board having the opportunity to see the draft budget and business plan twice before sign off
• the CS will have to be agreed and published before we can publish the budget and business plan
• when the Board looks at the business plan in February, linking back to the CS it will be really helpful to see how the plans are coming through. It was confirmed that the Finance team are looking at the CS, business plan and budget to see if there are any gaps and to get the sequencing and interdependencies right.

13. Committee assurance reports

Audit and Risk Committee assurance report: the Board noted the report for assurance with no comments.

Oversight of Operations quality improvements: the Board noted the proposed assurance arrangements for quality and improvements in the Operations Directorate which are, in summary:

1. Performance oversight and discussion of risk management via the Audit and Risk Committee (ARC).
2. Particular areas of change to published policies, principles and guidance remain reserved for the Board (for example financial penalties).

National Lottery Committee (NLC) assurance report: the Board noted the report for assurance with no comments.

Renumeration and Nominations Committee (RNC) assurance report: the Board noted the report for assurance with no comments. REDACTED commented that he would like to formally thank the Governance Team and NL3 officials for the quality of the support they have given over the years whilst REDACTED has chaired both NLC and RNC.

Appointment of Committee Chairs: the REDACTED introduced the item for decision. The terms of appointment of REDACTED and REDACTED end on 31 December 2023 and 11 April 2024, respectively (REDACTED being the Chair of the National Lottery Committee and REDACTED being Chair of the Audit and Risk Committee). The Board approved the appointment of new Committee Chairs as below:

• Audit and Risk Committee: REDACTED, effective from 12 April 2024
• National Lottery Committee: REDACTED effective from 1 January 2024
• Remuneration and Nominations Committee: REDACTED, effective from 1 January 2024.

14. Any other business

The Chair commented that this is REDACTED last Board meeting, before his term as Commissioner ends on 31 December 2023. On behalf of the Board and the Executive Team, and personally, he thanked REDACTED for all of his guidance and contribution as a Commissioner for the past 8.5 years, and wished him well in his future endeavours. REDACTED responded by saying he would very much miss the Commission and thanked all of his colleagues for their dedication and support during his time as a Commissioner.

15. Commissioners only session – not minuted

16. Below the line items (none)