Your questions answered on the financial risk checks consultation
Since the launch of our first set of consultations on the Government's Gambling Act Review White Paper, there's been some misunderstandings around financial risk checks and what they really mean. We've answered some important questions to clarify the most frequent misconceptions.
Posted 7 September 2023 by Andrew Rhodes
What financial risk checks really mean video
View a transcript of this video
It’s now been five weeks since we launched our first consultations relating to the Government’s Gambling Act Review White Paper.
In that time, we’ve received over 1500 responses, as well as talking to interested parties and stakeholders, and that’s really important because we want as many voices as possible to be heard during these consultations.
However, what is clear from some of those responses, and from commentary in the press and on social media, is that there’s a very high level of misunderstanding about what these consultations actually say, particularly when it comes to financial risk checks.
That misinformation covers things like suggesting that large numbers of people will be affected by the checks, that personal credit scores can be affected, or they’ll be introduced in betting shops and on race courses.
What we are trying to do is make sure that when people are responding to our consultation they’re doing so with the right information and they can help us strike the right balance between the freedoms of people to gamble but also protecting people from harm.
I hope this blog will help people understand the right information about the consultations and help them respond to this really important work.
Last month, the Commission opened the first consultation connected with the Government's Gambling Act Review.
In the last six weeks we have seen a significant amount of misinformation about proposed financial risk checks in direct responses to the consultation, in the media and on social media.
To aid responses during the remaining six weeks of the consultation we have published a series of questions and answers which we hope will clarify the proposals to make gambling safer.
We seek in our proposals to strike the right balance between the freedoms of people to gamble but also conducting proportionate checks to identify and protect the most vulnerable customers from harm.
The key points of the Government and Gambling Commission's proposals are:
frictionless financial risk assessments for an estimated 3 percent of gambling accounts. If no risk is identified a customer would continue with no further action
these checks would take place primarily via a credit reference agency, with no impact on credit score
nearly all gambling customers, and especially those who are likely to be high spenders, have a credit reference file which can be checked frictionlessly. However, in the very few cases where this can’t happen, a customer would be asked to consent to limited data sharing via a third party open banking provider (estimated 0.3 percent of accounts).
only where there is no credit file and the customer chooses not to consent to sharing of data via open banking would they be asked to provide other evidence of financial circumstances to allow risk to be considered. This means that only an estimated 0.3 percent of account holders would ever be asked to provide information such as payslips or bank statements
in addition, a light-touch financial vulnerability check, using publicly available data in order to check if a customer is for example bankrupt. These would be carried out on around 20 percent of accounts and most of those checked will not be inconvenienced at all. We do not propose any blanket rules about what action must be taken following a check - financial risk information gathered through these checks is to be taken into account alongside any other indicators of harm that might be present.
The aim of these proposals is to provide a more frictionless system benefiting consumers as they would not need to manually provide data and the data provided would be minimised and protected against misuse. The proposals would also benefit operators in having a clear understanding of requirements and allowing a frictionless system which is not currently available.
How and when will the financial risk and vulnerability checks proposed occur?
The consultation seeks views on two types of checks:
- light touch financial vulnerability checks using publicly available data
- financial risk assessments.
Light touch financial vulnerability checks
The first is putting in place a standard approach to a light touch check to identify customers who may be particularly financially vulnerable.
These are unintrusive checks, using publicly available data at moderate levels of spend. Some larger operators already conduct such checks for all customers at registration, and others do so at some point in the customer journey.
Government and the Gambling Commission are proposing for consultation that these checks are conducted at £125 net loss (accrued bonus funds and re-staked winnings would not be included) within a rolling 30-day period or £500 within a rolling 365-day period. This would identify significant financial vulnerability such as where a customer is subject to a bankruptcy order.
Financial risk assessments:
The second is a more detailed financial risk assessment at unusually high loss levels where it seems proportionate to understand more about the potential risk of harm. These assessments are proposed to be informed primarily by credit reference agency data.
Government and the Gambling Commission propose them to apply where there are losses greater than £1,000 within a rolling 24 hours or £2,000 within 90 days (accrued bonus funds and re-staked winnings would not be included). We also propose that the triggers for enhanced assessments should be lower for those aged 18 to 24.
Won’t these checks impact and cause inconvenience to a significant proportion of customers?
No, not at all and this is the key myth that we are hearing from various stakeholders. We have proposed a system of proportionate checks to target only the very highest spending customers where the impacts of any harm may be most severe.
Proposed light touch financial vulnerability checks would be carried out on around 20 percent of accounts and most of those checked will not be impacted unless serious concerns are raised and the operator takes some action to support that customer.
It’s estimated that just the very highest spending 3 percent of accounts would undergo financial risk assessments.
The vast majority of financial risk assessments - at least 80 percent - would be carried out through credit reference agencies. The check will be frictionless and not interrupt the customer journey unless concerns are raised. We estimate a further 10 percent of risk assessments will be done through limited data-sharing through third-party open-source banking, which is similarly straightforward from a customer perspective.
So our estimate is that at most just 0.3 percent of account holders would ever be asked to directly provide the additional financial information that operators are already requiring of some consumers. This means 99.7 percent of customers would not be asked to directly provide any information.
The financial risk checks consultation is your chance to engage in the development of policy, and we would invite your views on how the 0.3 percent of account holders could have their financial risk assessed if they're not asked to directly provide the additional financial information.
The 2018 Health Survey for England (opens in new tab) suggests that the percentage of people who have bet online with a bookmaker in the past year and are experiencing problem gambling is 3.7 percent. The proportions for people who participate in 'online gambling on slots, casino or bingo games' are 8.5 percent for problem gambling. The proportion of online bettors classed as being at 'moderate risk' is 5.2 percent and for those that participate in ‘online gambling on slots, casino or bingo games 13.8 percent.
Looking at the problem gambling rates, information about population level disposable income and loss levels by account the Government and the Gambling Commission consider these proportionate proposals to consult on and we welcome views.
How can you be sure these checks will be frictionless?
Most customers would not undergo checks under these proposals The government and the Gambling Commission have also been clear that we wouldn't mandate operators to implement checks at levels such as those proposed in the consultation until we were sure that they can be delivered frictionlessly for the vast majority of customers who would be checked. We would be looking to trial this following the consultation, should we decide to proceed.
Isn't this very burdensome on operators having to conduct a manual review of all accounts checked?
If a check shows no risk flags, there is no need for a customer to be inconvenienced at all, and the process can be entirely automated.
What does open banking mean? Will the gambling company have access to bank account details?
No, the gambling company would not have direct access to bank details. Instead, they would need to engage an FCA approved provider. The customer would choose whether to provide consent to this third-party provider who would then supply the operator with an assessment of financial risk.
Is it correct that a customer would be checked every six months?
For the light touch Financial Vulnerability Check, we have proposed that a customer would not be checked again for 12 months even if they met the loss thresholds again and we welcome views on this timeframe.
For the Financial Risk Assessment we have proposed that a customer would not be checked again for 6 months, even if they met the loss thresholds again. We welcome views on this timeframe.
After these periods, we propose that a customer would only be checked if they met the loss thresholds again.
Will these proposals impact betting in betting shops or at the racetrack?
No. These proposals only relate to online gambling.
Will a gambling company see my bank account?
Gambling companies would not have direct access to any individual consumer’s bank details or records.
Will my response to the consultation actually make a difference?
Yes, we welcome all views and will consider responses carefully. We will also continue to liaise with Government. It would be helpful if responses could set out as much detail as possible on what you think would work in practice to balance consumer protection and consumer freedom.
Will these checks impact on my credit rating?
No. As stated in the Government's White Paper (opens in new tab), credit scores will be unaffected by financial vulnerability checks or financial risk assessments and data on a customer's gambling behaviour will not be shared with the financial sector.
Isn’t there a risk that operators will use my data inappropriately?
If introduced, the Commission’s requirements will specify that these checks must only be undertaken at the appropriate time and for regulatory purposes, and the information must not be used for any commercial purposes, in line with data protection law. There are strong powers to take compliance and enforcement action should there be a breach of the proposed licence condition or data protection law more generally.
Under your proposals wouldn’t we have a situation where a punter could win £20,000 one week and then two weeks later have to undergo a financial risk check because they had lost £1,000 of their £20,000 winnings?
For the purposes of consultation, the Government and the Gambling Commission propose that winnings or losses outside of the seven-day period wouldn’t be taken into account for the purposes of triggering the need for a check. But they would be taken into account by the operator when considering what an appropriate response would be if any – for example if a customer has had an unusual and temporary losing streak with no other concerns this can be taken into account in considering if any or what action may be needed.
The seven-day period is subject to consultation. Any period set though would create the scenario of a potential big win just in advance of that period.
The only way this is avoided is to consider the lifetime profit and/or loss of the account and give weight to the relevance of a big win a number of years ago to a significant loss today. The period is solely for the purposes of triggering a check – not necessarily stopping the gambling or taking other action. The lifetime profit and/or loss of the account is likely to be one consideration amongst other information known about the customer that determines whether any action by the operator is required.
You don’t have financial risk checks when you buy a car or clothes, why should you have one for gambling?
While most people enjoy gambling and don’t experience harm, the Government has determined that gambling should be a regulated industry partly because of the harm that gambling products can cause. We welcome comments on proportionate measures should be in place to reduce that harm.
Do you consider these checks will force people to the black market?
Part of our statutory remit and a key licensing objective is to keep crime out of gambling. When consumers access potentially illegal gambling sites, they expose themselves to many risks and are not afforded the protections in place that are required in the regulated sector.
In recent years we have been able to direct more resource at tackling illegal online activity - this has led to enforcement actions increasing and a doubling of the number of successful positive disruption outcomes.
We have also been disrupting these sites upstream by working with other regulators, payment providers and Internet Service Providers to help us cut these sites off from the British market.
In addition, we have been promised additional powers to deal with illegal online gambling in the White Paper that was published in April.
However, we will never accept the argument that because an illegal online option exists, this should mean that the regulated gambling sector should have lower, less fair or less safe standards. Britain is, and must continue to be, a world leader in providing consumers with a fair and safe gambling market.
Why aren’t you proposing checks just for punters who gamble on riskier products like slots?
Although slots products are associated with greater risk, customers do experience harm gambling on other products too. Many customers gamble across multiple products. At threshold levels set out in the consultation operators would only be required to understand more about financial risk of 3 percent of active accounts.
In considering financial risk we consider it is appropriate to set a consistent net loss threshold rather than separating out on which products that loss occurred.
Variance in sports betting can mean seasoned but safe gamblers can go through losing periods which would easily result in a check. It doesn’t make them a problem gambler.
The thresholds we propose for checks represent a highly unusual period of loss, even among those who have a long history of gambling. Even when a check is triggered, the operator would then consider the results alongside all the information they know about the customer, such as their previous gambling history, in determining what if any action would be appropriate for them to take.
If the customer was playing with winnings, outside of the immediately preceding period, this would be taken into account by the operator in their consideration of potential action.
How can I respond to the consultation?
Have your say on the first set of consultations to implement proposals by Government in its Gambling Act Review White Paper - High stakes: gambling reform for the digital age. (opens in new tab)
About the author
Andrew Rhodes is the Commission's Chief Executive.