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  3. Summer 2023 consultation – Proposed changes to LCCP and RTS: Consultation Response

Consultation response

Summer 2023 consultation – Proposed changes to LCCP and RTS: Consultation Response

This response sets out our position in relation to the consultation on the proposed changes to LCCP and Remote Gambling and Software Technical Standards.

Published
1 May 2024

Last updated
1 May 2024 - Changes

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Contents

Background - Financial vulnerability and financial risk

The Gambling Act 2005 sets out statutory objectives, which includes protection of children and vulnerable people. The Gambling Commission has been working with government to consider the role of checks to understand if a customer’s online gambling is likely to be harmful in the context of their financial circumstances, in the form of 2 types of checks: financial vulnerability checks and financial risk assessments.

We want to prevent some of the serious cases we have seen such as where customers were able to spend large amounts in short spaces of time without any checks, or where customers who are bankrupt get no support. We think we can improve customer experience with a frictionless system based on data sharing that helps identify risk for the highest spending customers.

In 2020 to 2021 the Commission conducted a consultation and call for evidence exercise (opens in new tab) on the topic of remote customer interaction, including on unaffordable gambling. The findings from the consultation part of this exercise were set out in our response to the 2020 to 2021 consultation on customer interaction, and resulted in new customer interaction requirements which were introduced over the period 2022 to 2023. We also published an update on our next steps following the 2020 to 2021 consultation and call for evidence exercise, setting out the 3 key risks that we continued to seek to address:

  • the identification of financially vulnerable customers
  • addressing significant unaffordable losses over a short period (binge gambling)
  • addressing significant unaffordable losses over time.

In the update, we stated that we would continue to work closely with government to feed in advice and evidence to the government’s Review of the Gambling Act 2005 - recognising that broader public policy questions about how to protect people from harm would be considered as part of that review. We provided formal Advice to Government in 2023, including on the topic of financial risk checks.

In April 2023, government published the White Paper following the Gambling Act Review - High stakes: gambling reform for the digital age (opens in new tab). In this paper, government stated that ‘we consider it necessary to put new obligations on operators to conduct checks to understand if a customer’s gambling is likely to be unaffordable and harmful’. Government also set out their views on what thresholds should be consulted on namely:

  • ‘light-touch checks at moderate spend levels (we propose £125 net loss within a month or £500 net loss within a year)’
  • ‘escalate to more detailed checks for the highest spenders (we propose £1,000 net loss within a day or £2,000 net loss within 90 days)’.

In more detail, the proposals set out in both the White Paper and the Commission’s consultation were as follows.

Light-touch financial vulnerability checks

The first proposal was putting in place a standard approach to conduct light-touch checks to identify customers who may be particularly financially vulnerable (a financial vulnerability check). 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.

In the Commission’s consultation, we proposed these are conducted at £125 net loss within a rolling 30-day period or £500 within a rolling 365-day period, which we and government estimated would reach approximately 20 percent of customer accounts and identify vulnerability such as where a customer is subject to bankruptcy orders or has a history of unpaid debts.

Frictionless financial risk assessments

The second proposal was an enhanced financial risk assessment at unusually high loss levels where the risks are greater. These assessments were proposed to be informed by credit reference agency data. We proposed them to apply where there are losses greater than £1,000 within a rolling 24 hours or £2,000 within a rolling 90-day period. We also proposed that the triggers for enhanced assessments should be lower for those aged 18 to 24 years old.

In our update on our next steps following the 2020 to 2021 consultation and call for evidence exercise, we also stated that we would continue to engage with consumers, the financial sector and the gambling industry on the information about customers that should be available to gambling businesses, in order to assess financial risk. In July 2023, the Information Commissioner’s Office (ICO) published its consideration of the role of financial risk assessments and confirmed that data protection law does not stop gambling companies from conducting financial risk checks on customers, and that lenders can share people’s personal information – but this must be done transparently and proportionately. This was set out in a letter to finance body UK Finance and published on the ICO website (opens in new tab).

In December 2023, the Steering Committee on Reciprocity (SCOR) (opens in new tab)1, which is a cross industry forum made up of representatives from credit industry trade associations, credit industry bodies and credit reference agencies, approved a ‘specific and targeted exemption’ to the Principles of Reciprocity (PoR). This allows closed user group data to be shared on a limited basis with gambling operators in relation to consumers who have reached a financial threshold, to be prescribed by the Commission. While data is allowed to be shared with the gambling industry, the exemption provides that this is a one-way flow of data and no gambling consumer transactional data will be shared with the finance sector. The detail about financial risk assessments within the Principles of Reciprocity (opens in new tab) can be found from page 28.

In July 2023, we progressed the commitment to consult set out in the White Paper and in our Advice to Government and took forward our Summer 2023 consultation, including remote gambling: financial vulnerability and financial risk proposals (opens in new tab) where we proposed new obligations on operators to conduct checks to understand if a customer’s gambling is likely to be harmful in the context of their financial circumstances. We noted that it was important that these checks would be seen within a gambling business’s overall approach to identifying risk of harm and taking action to prevent gambling harm.

As identified in our earlier work, the proposals were designed to tackle 3 key risks of gambling harm:

  • binge gambling
  • significant unaffordable losses over time
  • financially vulnerable customers.

These had been particularly evident in our casework with remote gambling operators. To tackle these risks, we worked with government, and we proposed 2 checks, in the form of financial vulnerability checks and financial risk assessments.

Over the whole period of this work (with a call for evidence, government review and white paper and our Summer 2023 consultation), the proposals for financial risk checks attracted a great deal of interest from a range of stakeholders. Many stakeholders, such as industry trade bodies, some operators, licensing authorities and other bodies supported the principles of both of the proposed types of checks but had comments and concerns on certain detailed aspects of the proposals.

Some gambling consumers, many people with lived experience of gambling harms and some academics supported the checks but stated that they considered that the proposals did not go far enough. Some of these respondents suggested that the thresholds for checks should be lower, or even for all customers, or that the process of checks should be managed by a third party.

However, the proposals were opposed by some stakeholders, particularly within the racing and betting community, who considered that the proposals would harm racing and were not proportionate or reasonable either on a point of principle or at the levels proposed.

Whilst we do not have figures on the number of consumer respondents to the consultations that came specifically from the perspective of betting and racing, it was clear that many of the consumer respondents were interested in this aspect and had concerns of one form or other. Within the consumer respondents, amongst both those who had a racing perspective and others, there were many who still supported the principles of the proposals but did not agree with the details. In particular, the details that they disagreed with were the potential thresholds of the checks, the nature of data to be included in either of the checks, or they raised concerns that they would be burdensome or not frictionless or that they might be introduced without further testing. Some respondents proposed that the checks should only apply to gambling on certain products, such as online slots.

There was, however, some confusion from some respondents to our consultation and call for evidence exercises, often exacerbated by the fact that those respondents had heard about the proposals via campaigns and trade publications where the details were not fully covered or could be confusing. For example, some consumers had received the impression that all customer accounts would undergo the checks whereas it was proposed that only a proportion of the highest-spending accounts would have checks. Others had received the impression that the checks proposed were more like a cap on gambling, regardless of the financial circumstances of the customer. The proposals however were not to act as a cap and were designed to consider overall risk for the customer and take account of any specific financial risk for the customer. In September 2023, we made available some information on our website to answer some of the common queries or areas of confusion in a Commission Blog.

Alongside the Summer 2023 consultation, we commissioned consumer research to gain greater insights from gambling customers about the proposals in the Summer 2023 consultation. This Consumer Voice work has brought in additional perspectives and allowed more in-depth exploration of the issues with a range of consumers. Alongside this response, we published the results of the consumer research relating to financial risk which we commissioned.

We have listened carefully and considered responses to the consultation, alongside our evidence and consumer research. With government confirmation that our approach is in line with the White Paper, we have decided to implement the light-touch financial vulnerability checks in 2 stages and we can also update that we will conduct a pilot and data collection for the enhanced financial risk assessments.

Further detail is set out in:
Our position: Light-touch financial vulnerability checks
Our position: Next steps for a pilot of enhanced financial risk assessments

References

1SCOR will be undergoing a transition following the Financial Conduct Authority’s (FCA) ongoing Credit Information Market Study (CIMS). As part of this work, a new Credit Reporting Governance Body (CRGB) is being established which will oversee how credit data is collected and shared in the future. The FCA will be coordinating the setting-up of the CRGB with the assistance of an Interim Working Group, which includes both industry and consumer representatives.

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