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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.

Summary of checks overall - Financial vulnerability and financial risk

We have to get the balance right between protecting people from the potentially life-ruining effects of gambling-related harm and respecting the freedom of adults to engage in an activity that the vast majority do so without experiencing harm.

We want to prevent some of the very serious cases we have seen where customers were able to spend large amounts in short spaces of time without any checks resulting in significant gambling harm. Customers have the freedom to spend their money as they wish, so long as vulnerable customers are not being exploited and all customers are supported to make informed choices.

We are therefore working towards a new, proportionate and frictionless system of checks to make processes smoother and better for customers. We do not seek to mandate a cap on gambling, or to interrupt the customer journey unnecessarily, and the checks would not impact on a customer’s credit score.

We consulted on 2 types of checks which would work as a package together to identify customers at risk of harm amongst the highest spending customers - the light-touch financial vulnerability check to consider things like bankruptcy and the financial risk assessment to consider credit reference data and identify potential consumer risk.

We value the consultation responses we have received. We have been listening carefully to the voices of consumers and other stakeholders. We have made some changes to our proposals following consultation, working with government and other interested parties.

Following consultation, we are introducing a light-touch and frictionless financial vulnerability check to consider publicly available data for things like bankruptcy. This will be implemented in 2 stages, and we have focused the check on publicly available data. Some operators already conduct such checks.

We are committed to improving customer experience with the proposed financial risk assessments. We consider customer experience can be improved with a frictionless system based on data sharing that helps identify risk for the highest spending customers. But we will not roll out the assessments until we are satisfied that the data-sharing between credit reference agencies and gambling businesses can work well, and that the assessments can be conducted in a frictionless manner for the vast majority of customers who undergo them, without the customer providing documents.

We are therefore going to run a pilot with the largest operators to test the practical issues before a final decision is made on whether and how these assessments take place. The pilot will assess the type of data that will be used to inform a customer’s risk assessment. For example, credit reference agencies, could share information on any credit arrears a customer has without customers needing to submit documents. Gambling operators will never have access to raw account level data, for example they would not be able to look at customers’ bank accounts.

Consumers will not be affected during a pilot period.

We are proceeding with this pilot of the frictionless financial risk assessments to inform whether and how these assessments could be introduced. Whilst final decisions will not be made until after the pilot period, the government’s White Paper estimated that based on the thresholds set out in the consultation, the assessments would be conducted on approximately 3 percent of active customers and that only 0.3 percent of active customer accounts would be unable to receive a frictionless check.This could be, for example, if a person does not have a credit history.

Light-touch financial vulnerability checks: summary

These are checks which some operators already carry out and therefore do not need to be piloted. They are very light-touch and conducted without interruption to the customer journey unless concerns are identified. The checks will identify financial vulnerability such as where a customer is subject to bankruptcy orders or has a history of unpaid debts. They will focus solely on publicly available data and, following feedback through the consultation, we are not requiring gambling businesses to consider an individual’s personal details such as postcode or job title.

Following consultation, we have focused on the monthly threshold rather than also including an annual threshold as a minimum requirement. This is because we consider that the vast majority of those that would trigger an annual threshold would have previously triggered a monthly threshold. We also consider that a customer with a consistent spend profile over the year is less likely to be experiencing financial distress associated with gambling if there are no other indicators of harm. Finally, we have made some detailed amendments to the provision relating to definitions and clarifying how the data may be processed, considering practical issues raised by gambling businesses. For example, we have clarified that where there are no risk flags, the data may be processed automatically ensuring again that the customer journey is as smooth as possible.

To ease the introduction of these checks, they will initially come into force at a higher threshold of £500 net deposits in a rolling 30 days from 30 August 2024, before reducing to a lower threshold of £150 net deposits in a rolling 30 days on 28 February 2025, to smooth implementation for consumers. We will evaluate the impact of these checks and will continue to keep thresholds and other details under review. We have set out more information about the approach to evaluation on our website.

Further detail is set out in Our position: Light-touch financial vulnerability checks.

Frictionless financial risk assessments: summary

The consultation proposal was for enhanced financial risk assessments informed by credit reference data at unusually high loss levels where the risks are greater.

We proposed frictionless financial risk assessments to make processes smoother and better for customers while providing operators with better quality data to make informed decisions to minimise harm where necessary.

The government’s White Paper (opens in new tab) estimated that based on the thresholds set out in the consultation, the assessments would be conducted on approximately 3 percent of active customers and that only 0.3 percent of active customer accounts would be unable to receive a frictionless check. This could be, for example, if a person does not have a credit history.

We recognise the interest the proposal for these assessments has attracted, and we therefore asked in the consultation how these assessments could be introduced in a careful manner. Many people supported the idea of a pilot to further test how data sharing between gambling operators and credit agencies works in practice. We agree and have decided that a pilot and data collection period is the appropriate way to proceed.

We are proceeding cautiously with a pilot of the financial risk assessments for approximately a 6-month period (plus time for reporting). The pilot will not affect any consumers and will enable us to make decisions about how financial risk assessments could be introduced.

This new frictionless and improved system would help identify financial risk for the highest spending customers and improve existing customer experience. But we intend to target checks at the highest spenders, and we do not intend to consider rolling out the assessments until we are satisfied that the data-sharing is frictionless as intended for the vast majority of customers who are checked.

Customers will not be affected during a pilot period to make sure that we can refine the data sharing processes before considering whether the assessments would be rolled out in a live environment. The pilot will test out the different forms of data available to consider what is helpful and meaningful in the gambling context.

We are therefore publishing this consultation response relating to the pilot approach. The Licence Conditions and Codes of Practice (LCCP) provision is set out in this response. If the pilot progresses well, we will then consider whether these frictionless checks for the vast majority of customers who undergo them should be rolled out in a live environment.

The decision to introduce any final financial risk assessments will be subject to the findings from the pilot and data collection period. We intend to publish a final and full response to the consultation with our decision, which we expect will not be until at least 2025 (following the pilot period).

The pilot will enable us to test the details of data-sharing in practice, working with credit reference agencies and gambling businesses, thinking always about what this means for the consumer journey for gambling and betting consumers. The data collection will help us further assess the impact of the proposed changes on the industry and consumers, including the proportion of customers that may in the future undergo an assessment, to ensure that the assessments would be appropriately targeted if they are rolled out in a live environment in the future.

For the purposes of the pilot, we consider it reasonable that the largest operators are required to participate. We have therefore decided to require operators in the highest 3 relevant bands of operating licence fee categories, with a significant proportion of market share. We consider that this group will provide us with sufficient information during the pilot period to inform decision-making whilst also imposing any burden for operators on those with the largest resources and those most likely to be able to participate in a pilot easily and effectively.

We will additionally seek volunteers from operators outside of these fee bands to participate. While we think it is important to offer the opportunity for some medium or smaller operators to contribute to the pilot, we did not consider it proportionate to require smaller operators to do so.

The pilot provision will be set out in the LCCP and is detailed further below in this response.

The pilot will commence at the end of August 2024, and should we then decide to fully implement the assessments, they would not be introduced in a live environment before 2025.

Further detail about the pilot and our next steps are out in Our position: Next steps for a pilot of enhanced financial risk assessments.

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