Consultation response
Changes to the licence conditions and codes of practice on High Value Customers
Response to consultation on strengthening controls on how licensees incentivise high spending customers.
7 - Use of incentives
Feedback collected from former HVCs suggested that incentives have been used to accelerate spend, cross-sell to other gambling products, encourage a return to gambling after a period of inactivity, or to placate them following heavy losses.
In several cases resulting in a customer experiencing gambling-related harm, the licensee has failed to demonstrate how they considered the appropriateness of incentives they offered to the HVC. In some instances, this has resulted in incentives exacerbating at-risk behaviour.
The timing, nature, and persistence of offers or incentives in circumstances where markers of harm are evident are a serious cause of concern. We have identified a number of incidences in which licensees have failed to evidence what steps they have taken to ensure the risks associated with common issues have been considered and mitigated.
The draft guidance includes a non-exhaustive list of key considerations to ensure incentives are not used to exploit vulnerable customers or to encourage problematic behaviour.
Consultation question
- Do you agree with the proposed guidance on the use of incentives within HVC schemes?
- Are there any additional safeguards or good practice which should be included in the guidance relating to the use of incentives?
Respondents' views
Most respondents supported the proposals on the use of incentives within HVC schemes. Some respondents suggested that the draft guidance would benefit from amendment to reflect that some information may be withheld by the customer.
One respondent noted that changes to a customer’s personal circumstances can only be considered where licensees are made aware of or have reason to believe they have taken place. Another respondent echoed this opinion and suggested that an acknowledgement of the licensee’s remit, as in earlier sections of the guidance, could be included.
Respondents also used this section to request further guidance on incentives to non-HVCs. It was observed that any staff-customer engagement regarding incentives encourages further play, regardless of the timing.
Another respondent commented that delaying incentives – in this example, bonuses based on recent activity – would not achieve the desired outcome and that it would be more problematic to tie bonuses to future deposits or losses.
Some respondents sought further definitions on the language used in this section and the types of incentives that could be offered. One respondent suggested that further clarification of terminology would prevent decisions being left open to judgement by individual managers.
For example, there was a risk that the use of the term significant losses could be interpreted without proper consideration of the customer’s relative affordability.
This respondent proposed amending the wording to read significant losses in relation to net-worth and/or affordability.
Our position
We consider the draft guidance to sufficiently reflect our expectations of how licensees can safely offer incentives. We recognise that in some instances, customers may choose to withhold knowledge that could otherwise inform a licensee’s decision to offer incentives. We accept that licensees can only be held to account for information they hold or could have reasonably obtained prior to making commercial decisions and have updated the guidance to take account of this.
The guidance supplements the existing LCCP requirements regarding rewards and bonuses and offers additional support on the incentivisation of HVCs.
Any interaction between HVC staff and customers must be handled responsibly and should not be used to encourage additional gambling beyond what a customer can safely afford in time or money. We have highlighted the need to consider the timing of when incentives are offered as a particular type of engagement which has been shown in some circumstances to be problematic.
Our casework findings have suggested that the timing (and persistence) of offering incentives encouraged additional spend where a customer was more susceptible to taking risk, for example, having experienced heavy losses or used all their account balance. The guidance maintains that this example, and other situational vulnerabilities, should be taken into consideration before offering any incentive.
Incentivising valued customers is an established commercial practice in the gambling industry and is expected by some consumers. However commercial motivations or consumer expectations cannot override the licensing objectives. We expect licensees to pause any customer incentivisation should any indicators of potential harm require investigation and consideration.
We agree that the use of the term significant losses is subjective to the individual customer’s spending and affordability and will reflect this in the guidance. However, more stringent definitions around types of incentives may undermine a licensee’s responsibility to make situational decisions in the interest of an individual customer’s case.
Where evidence emerges around particular types of incentives or the way they are offered are leading to harm, we will apply specific restrictions to individual licensees or more generally.
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HVC Response 8 - Further consultation questions
Last updated: 29 September 2020
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