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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

Proposal 2: For organisations with a Board, the person responsible for chairing the Board should hold a Personal Management Licence?

Proposals

We consulted on the proposal that the person with responsibility for chairing the Board of an organisation (where the licensee has such a body) should be required to hold a Personal Management Licence (PML), to ensure that those responsible for scrutiny, strategy and leadership at the most senior level within the organisation hold a personal licence under licence condition 1.2.1 (2)(b).

Consultation question

To what extent do you agree with the proposal that for organisations with a Board, the person responsible for chairing the Board should hold a PML?

Respondents’ views

We received mixed responses to this question. Supportive respondents welcomed the proposal stating it was hugely important to regulate all individuals in top leadership positions, to ensure that key decision makers have a personal stake in upholding responsible gambling practices and compliance with relevant regulations. However, other respondents noted that the position of Chair is typically advisory and non-operational. A small number of respondents, whilst accepting the Board is responsible for the overall strategy, expressed concerns that:

  • there is potential conflict with the UK Corporate Code of Governance (the Code) in respect of the role occupied by non-executive chairs and executive chairs
  • non-executive chairs are not responsible for the day to day running of the gambling operation
  • the proposal maybe unworkable for companies registered under Maltese company law, as there is no equivalent of a non-executive Chair and the position can be occupied by any one of the directors who is appointed as Chair for an individual meeting
  • the Companies Act 2006 does not necessarily require permanent chairs to be appointed, so this role could (in theory), be undertaken on a rotated basis by certain boards for UK registered companies.

Some respondents operating in the charity and society lottery sectors incorrectly understood the provision would apply to their sectors. The condition will apply to holders of an External Lottery Manager licence and is not applicable to Society Lotteries.

Our position

We have considered the concerns raised by stakeholders and have concluded that:

We do not consider it is unlawful or contrary to the Code to impose such a requirement. Although there is a division between the role of a non-executive board member and the executive, that does not mean that the former has no responsibility for compliant gambling. Notably, a non-executive is still responsible for overseeing the gambling operation and holding management to account, and whilst we recognise that our primary focus in most cases will be centred around the actions of those directly responsible for compliance, we nevertheless consider that in certain cases it would be reasonable to investigate whether proper oversight had been provided.

We know that some of our licensees are subject to company law internationally and acknowledge there may not always be a non-executive chair appointed in an organisational structure. Consequently, we do not make this distinction between an executive and non-executive chair in proposing the requirements. Rather, we want to ensure that anyone who is appointed as a chair on a fixed or indeterminate term of office (and not on a transient and/or short-term basis for individual meetings), is caught by the condition.

It would be helpful to clarify the Gambling Commission’s intent in proposing the requirement, notably that the intention was not to capture infrequent, rotating and temporary Chairs. For example, we do not think it would be proportionate to apply the requirement to a director who is appointed as chair for an individual meeting or on an ad-hoc basis only.

We have decided to implement the provision as consulted but to remove any ambiguity. We therefore have made it clear that the provision applies to a Chair who is appointed for a fixed or indeterminate term of office and not on a transient and/or short-term basis for individual meetings.

Final wording

Applies to: All casino, bingo, general and pool betting, betting intermediary, gaming machine general, gaming machine technical, gambling software and lottery managers licences, except ancillary remote licences.

1.2.1 (2). The specified management offices are those offices (whether or not held by a director in the case of a licensee which is a company, a partner in the case of a licensee which is a partnership or an officer of the association in the case of a licensee which is an unincorporated association) the occupier of which is by virtue of the terms of their appointment responsible for:

b. chairing the Board (where the licensee has such a body) where that appointment is held for a fixed or indeterminate term of office, unless:

  1. the position is held only on a transient and short-term basis for individual meetings; and
  2. the licensee retains evidence in support of point 1.

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