Licensing, Compliance and Enforcement Policy: Consultation Response
This response sets out our position in relation to the consultation around proposed changes to our Licensing, Compliance and Enforcement Policy.
- Executive summary
Summary of responses - Licensing changes
- - Proposal 1: Policy position in relation to dual regulation products
- - Proposal 2: Changes to complete applications
- - Proposal 3: Clarification of relevant persons
- - Proposal 4: Timescale for using licence
- - Proposal 5: Clarification of suitability criteria
- - Proposal 6: Clarification of financing arrangements
- - Proposal 7: Addition of new examples to update the Commission about
- - Proposal 8: Minor updates to reflect minor changes to processes in the policy
- Summary of responses - Compliance changes
- Summary of responses - Enforcement changes
Proposal 1: Policy position in relation to dual regulation products
The Commission considers that products whose name, branding, marketing or game rules contain language associated with financial products such as 'stock', 'share', 'index' or 'investment' risk harming the second and third licensing objectives, because they may give the impression that they are in the nature of a valuable investment rather than a gambling product. Products which are or may also fall to be regulated by other regulators, for example under the Financial Services and Markets Act 2000 (opens in a new tab), create the risk of uncertainty as to where the regulatory responsibility may lie, so risking harm to the second and third licensing objectives. Accordingly, the Commission will not normally grant operating licences involving such products.
- Q5. To what extent do you agree with the proposed policy position (that the Commission will not normally licence gambling products whose name, marketing and games rules contain language associated with financial products or products that we consider contain elements that do or may fall to be regulated by other regulators)?
The majority of respondents agreed with the proposal. Respondents noted that products should be marketed in a transparent manner and should not utilise language that is indictive of being a financial or investment product rather than a gambling one. Furthermore, respondents noted the need for consumers to have clarity in relation to the protections that are, or are not, in place.
Respondents commented as follows:
- products could fall through a regulatory gap, with little or no consumer protection in place
- the approach would stifle innovation and economic growth
- the statement ‘will not normally grant’ was too vague and that it would be helpful to be explicit on any exceptions that may apply
- the approach amounts to a blanket ban on products of a certain type.
A number of respondents made comments about adopting a policy position based upon the use of language associated with financial products. These included:
- whether refusing to licence a gambling product due to its presentation was consistent with the Commission’s duty to permit gambling in so far as it is reasonably consistent with the pursuit of the licensing objectives
- the Commission needs to do more than manage such products with language
- reaching a decision based on the inclusion of words such as 'stock', 'share' or 'index', suggesting the principle of not granting a licence should focus on products that are predominantly marketed as financial products.
In the absence of legislative change at this time and given that we cannot licence products that fall outside of our remit, the best approach is to provide clarity to customers about what is licensed by us, what is not licensed by us, and what protections they are afforded.
We do not agree that this approach stifles innovation or is inconsistent with our duty to permit gambling in so far as it is reasonably consistent with pursuit of the licensing objectives. Gambling innovation must occur within the boundaries of the Gambling Act 2005 (opens in a new tab) and we consider that presenting a product as something it is not, via use of language and imagery most commonly associated with the financial sector, is not reasonably consistent with the licensing objectives which refer to gambling being conducted in a fair and open way and protecting people from being harmed or exploited by gambling.
Where gambling products with names, marketing and games rules contain language associated with financial products, we will apply a principles and risk-based approach aimed at ensuring that the language used is not misleading and that customers can readily determine if they are placing a bet, playing a game of chance or taking part in activity that falls to be regulated by others. The words listed in the policy proposal were for illustrative purposes and not an exhaustive list.
Some respondents sought clarity on the exceptions that may apply to the policy. Applications are reviewed on a case-by-case basis, and applicants will have the option of altering product offerings to bring them entirely within or take them entirely outside of our remit, thus addressing concerns over regulatory uncertainly. Furthermore, for products entirely within our remit, applicants will have the ability to change their product presentation and marketing to ensure our policy objectives are met.
Based on the above, we will proceed to implement the policy we proposed which we conclude provides clarity to consumers and operators and best mitigates the risks of consumer confusion and exposure to financial risk and possible harm.
Proposal 2: Changes to complete applications
Last updated: 22 June 2022
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