Changes to the licence conditions and codes of practice on High Value Customers
8 - Further consultation questions
Respondents were invited to consider potential implementation costs and whether an implementation period of four weeks provided sufficient time to meet the minimum standards.
- Are there any aspects of the LCCP requirement and associated guidance which would require an implementation period longer than four weeks (for example, should your current approach to HVCs not meet the minimum proposed standards)?
- Are you able to provide an estimate of the costs that might be incurred by your business in implementing the proposed requirements?
Most respondents expressed uncertainty around providing an exact time frame for meeting the new guidance. However, many suggested that a four-week implementation period would not be sufficient. Some respondents noted that the necessary changes needed to meet the requirements – including software updates, staff training, and source of funds checks – could take up to twelve weeks to implement.
Several respondents expressed support for a three-month implementation period in line with the Commission’s standard period for regulatory requirements. One respondent noted that some source of funds checks can take a minimum of four weeks.
Another suggested that four weeks would suffice for the planning period only, particularly as many workforces remain based at home with reduced capacity. Many respondents noted that additional time would be needed for conducting checks on existing HVCs, as well as reviewing new onboarding procedures.
Some respondents anticipated that additional provisions around offering HVC schemes could impact operating costs and revenue. Several respondents noted that implementing the proposed changes would incur additional costs, particularly around staff training and recruitment.
Other respondents commented on the need to allocated further capacity and funding to information technology in order to conduct additional checks and store relevant customer information. Some respondents provided implementation cost estimates ranging from £50k to £1.3m. A number of responses suggested the proposed changes would incur no additional cost to licensees.
It was noted that tighter restrictions on HVC schemes could have an indirect impact on related leisure and hospitality industries. The primary example was the racing industry, which it was claimed could see a sharp reduction in corporate hospitality events linked to race sponsorship.
It was estimated that the restrictions could result in a reduction in income to racecourses. It was claimed that if implemented, the proposals would affect investment in race sponsorship and exacerbate the serious and unexpected impact on racing’s finances, which are already under strain due to the Covid-19 restrictions.
As HVCs are a subset of the wider customer base, licensees should already be applying regulatory controls concerning customer protection, due diligence, and the prevention of criminal proceeds being used to fund gambling. The need to introduce additional specific guidance around HVC schemes is due to a failure on the part of licensees to collectively raise standards despite the Commission highlighting common failings in this area.
The Commission signalled its clear intent to see rapid improvements in how HVC schemes are operated in October 2019. A large proportion of the industry has already committed to apply the voluntary code announced by industry representatives in May 2020. For those licensees, this guidance represents additional adjustments in a few targeted areas.
Those licensees who have chosen not to apply the voluntary undertakings or applied controls of their own, will now need to make the necessary adjustments to apply the new guidance at pace or suspend their HVC schemes until such time as they can demonstrate the guidance has been applied.
We note that more stringent checks will likely impact the number of customers that qualify for HVC incentives, and may indeed deter consumers from joining an HVC scheme. However, we are clear that responsibility lies with a licensee to ensure that their decision to treat someone as having a high disposable income which can fund higher gambling spend (and incentivise them as such), is based on robust ‘know your customer’ and due diligence checks.
We cannot allow concerns regarding the potential knock on impact on hospitality and sponsorship arrangements to temper the need for appropriate controls to ensure HVCs are gambling safely and within their lawfully acquired means.
The changes to SR code provision 5.1.1 will come into effect on 31 October 2020.Previous section
HVC Response 7 - Use of incentives Next section
HVC Response 9 - Other issues
Last updated: 29 September 2020
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