Consultation response
Financial key event reporting: Reporting changes in ownership and interests: Consultation response
The consultation response on reporting changes in ownership and interests as a key event.
Contents
- Executive summary
- Introduction
- Summary of responses
-
- Proposal 1: Raising the reporting threshold for ‘operator status’ and ‘relevant persons and positions’ from 3 percent to 5 percent
- Proposal 2: Amendment to paragraph 2 of Licence Condition 15.2.1 to expand the application of ‘relevant persons’ to include shareholders, but also other entities with both direct and indirect interests in the licensee of 5 percent or more
- Proposal 3: Amendment to paragraph 3 of Licence Condition 15.2.1 to include the reporting of entering into financial agreements or arrangements with third parties and/or the receipt of financial assistance from a group company
- Proposal 4: Introduction of a new requirement for licensees to report to the Commission the details of individuals who acquire the equivalent of £50,000 or more worth of new shares in a rolling 12-month period
- Proposal 5: Amendment to the Licensing, Compliance and Enforcement Policy Statement under the Gambling Act 2005 to raise the threshold of shareholders to be listed from 3 percent to 5 percent
- Equalities considerations
- Business impacts and implementation
- Annexes
Proposal 3: Amendment to paragraph 3 of Licence Condition 15.2.1 to include the reporting of entering into financial agreements or arrangements with third parties and/or the receipt of financial assistance from a group company
Proposal
We proposed amendment to paragraph 3 of Licence Condition 15.2.1 to include the reporting of entering into financial agreements or arrangements with third parties and/or the receipt of financial assistance from a group company that has entered into such financial agreement or arrangements so that these are reported to the Gambling Commission. We proposed to move this to LCCP 15.2.1 paragraph 6 (changing the current paragraphs 6 and 7 to paragraphs 7a and 7b, accordingly).
Consultation question
To what extent do you agree with the proposed new requirement at Licence Condition 15.2.1 paragraph 6 to add any type of financial arrangement entered into with any persons not authorised by the FCA (Financial Conduct Authority)?
Respondents’ views
Whilst there was some support for this proposal the majority of respondents disagreed.
The consultation also asked for comments on the proposed new wording of Licence Condition 15.2.1 paragraph 6 and whether respondents could foresee any difficulties in complying with the proposed change.
The main objections to the proposal were:
- the Commission has not adequately explained why any change to the current notification requirement is required
- the current regime is fit for purpose and adequately addresses the lending relationships that the Commission is concerned about
- there appears to have been no assessment conducted by the Commission regarding the potential administrative and operational impact of this requirement on licensees, particularly those with diverse and international financial dealings
- the Commission has not adequately explained why it thinks there is a new or changed risk to the licensing objectives such that this very broad requirement is necessary and proportionate
- the wording of the Commission's proposal does not provide sufficient clarity as to operators' obligations under this proposal, if it is implemented
- the definition of ‘financial arrangement’ is too broad and should be limited to ‘material financial arrangement’
- the term "financial agreement or arrangement" is not a legal term and does not have an established meaning in English law and could be interpreted as referring to any form of commercial agreement, including customer contracts and supplier agreements
- there needs to be recognition that, within groups of companies, intra-group loans are made on a regular basis and the regime applicable to those needs to be practical and proportionate
- intra-group loans should only be disclosable to the Commission where the intra-group lender is onwards lending proceeds to a licensee which it has obtained from an entity outside its group which was not authorised by the FCA
- the exemption should not be restricted to the FCA, equivalent financial regulatory authorities in other jurisdictions should also be considered to reflect the reality of global finance
- the proposed changes do not reflect the fact that the entity entering into the arrangement may not be FCA authorised, but several related companies may be FCA authorised
- the requirement should not apply to corporate listed debt, given the regulatory supervision and market controls which apply to the listed debt market
- with the exception of warrants, all of the examples provided in the consultation document appear to be forms of loan and therefore already covered by the requirement to report the entering into of loan agreements
- in relation to warrants specifically, a warrant is a security that entitles the holder to buy stock in the future at a fixed price, and it may be that no money flows into the operator's business as a result of issuing a warrant until the decision is made by the holder to buy stock. On that basis, warrants should not need to be reported to the Commission
- the administrative burden that the proposed requirements will present is likely to be significant.
Respondents suggested that the Commission should provide a list of those regulators that it deems to have appropriate regulatory frameworks in place that can be said to be equivalent to that put in place by the FCA. Some respondents suggested this should include, at the very least, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the US Security and Exchange Commission, and all financial services regulators in EU and EEA countries. To the extent that the Commission feels that it does not have sufficient information about these systems, the proper action for it to take would be to commence a call for evidence in respect of the same, or liaise with its counterparts in other jurisdictions to satisfy itself as to the adequacy of their financial regulations.
One respondent suggested that the Commission might want to amend the current licence provision to state that the notification requirement applies to loans "whether or not in writing" and that, where a loan is not in writing, the licensee must provide the Commission with details of the key terms of the loan.
Our position
After careful consideration of the issues and objections raised to the proposed expansion of the reporting requirement to include all financial arrangements and financial assistance from group companies, we have concluded that we will retain the existing wording of paragraph 3 of Licence Condition 15.2.1, with one minor amendment for clarification only.
We will update our guidance notes to address the following issues that we have noted through casework:
- notifiable loans are not always reported correctly, or at all, to the Commission
- the clarity and accuracy of the information provided to us is poor in some cases
- raising money from entities that are not regulated, or from jurisdictions where financial regulation is less rigorous is inherently risky, and some licensees have struggled to provide adequate evidence of the legitimate source of funds.
The LCCP currently exempts the need to report loans from FCA regulated entities. Whilst we are supportive of the view that retaining the exemption only for FCA regulated loans does not reflect the increasingly international nature of the industry, we have been unable to formulate a clear mechanism to identify FCA equivalent financial regulators at this time.
The Commission cannot undertake to publish a list of FCA equivalent regulators as this would be overly burdensome to compile and keep up to date (as a regulator of gambling activities, not financial services) and would thus divert resources away from our core purpose.
We note from the responses that there appears to be a misunderstanding as to requirements to report loans between entities in the same group (i.e. intra group loans). We have received multiple queries about this in recent years and we accept that the current guidance is not sufficiently clear. For the avoidance of doubt, the Commission does not need to be notified of borrowing by group entities of our licensees if the funds do not ultimately flow into the licensee (in whole or in part).
Occasionally, the non FCA loans notified to us are not supported by a written agreement or contract (for example, the loan to the licensee may be an informal personal loan from a shareholder without any contract drawn up). These are, and will continue to be, reportable events as we may want to undertake follow up enquiries in relation to the source of funds. We have therefore decided to add the words ‘(if any)’ after the requirement to attach a copy of the relevant contract or loan agreements to the key event notification, to make it clear that such loans are reportable even if there is no agreement in writing.
Final wording
This amendment will come into force on 19 March 2026.
Updated Licence Condition 15.2.1, paragraph 3
- The taking of any loan by the licensee, or by a group company who then makes an equivalent loan to the licensee, from any person not authorised by the Financial Conduct Authority: a copy of the loan agreement, if any, must be supplied.
Applies to: All operating licences.
Proposal 2: Amendment to paragraph 2 of Licence Condition 15.2.1 to expand the application of ‘relevant persons’ to include shareholders, but also other entities with both direct and indirect interests in the licensee of 5 percent or more Next section
Proposal 4: Introduction of a new requirement for licensees to report to the Commission the details of individuals who acquire the equivalent of £50,000 or more worth of new shares in a rolling 12-month period
Last updated: 18 December 2025
Show updates to this content
No changes to show.