Guidance
Customer funds: segregation, disclosure to customers and reporting requirements
Customer funds: segregation, disclosure to customers and reporting requirements
Advice on implementing licence condition 4.2.1 (disclosure to customers)
Licence condition 4.2.1 applies to both remote and non-remote operators who hold customer funds. It contains at paragraph 1 the requirement that information must be set out in operator terms and conditions about whether customer funds are protected in the event of insolvency, the level of such protection and the method by which this is achieved.
At paragraph 2 of the same condition, we specify that:
- information must be available on the first occasion on which customers deposit funds (and on each occasion when the arrangements for the protection of customer funds change)
- the customer must be required to actively acknowledge receipt of this information about customer funds before being permitted to gamble.
Paragraph 2 also specifies that such information (the information in both terms and conditions and prior to deposit) must be set according to any rating system specified by the Commission and in such form the Commission may from time to time specify. We set out the format that this ratings system must take in this section.
Paragraph 3 specifies that where the operator has selected a ‘not protected’ rating, it must remind the customer, once every 6 months, that their funds are not protected. This requirement only applies to customers the operator is holding funds for.
The reminder must set out the amount that the operator holds for that customer, and state that the funds would not be protected in the event of insolvency.
It is for the operator to determine the appropriate channel for this information. For example, for remote operators, this could be through using a pop-up message on its website or sending an email.
The operator must then require the customer to acknowledge the reminder to enable the customer to continue to use the funds for gambling. Operators must send the reminder to customers once every 6 months.
Society lotteries and/or External Lottery Managers (ELMs) that do not conduct high-frequency lotteries or offer instant win games are exempt from the requirement in paragraph 3.
The requirement at paragraph 3 comes into effect on 31 October 2025. As long as operators that need to follow the requirement remind customers within 6 months of the date the requirement comes into place, this will be sufficient to demonstrate compliance with the frequency element of this requirement.
Licence condition 4.2.1
Disclosure to customers
All operating licences, except gaming machine technical, gambling software, ancillary remote bingo, ancillary remote casino licences
1. Licensees who hold customer funds must set out clearly in the terms and conditions under which they provide facilities for gambling information about whether customer funds are protected in the event of insolvency, the level of such protection and the method by which this is achieved.
2. Such information must be according to such rating system and in such form the Commission may from time to time specify. It must be provided in writing to each customer, in a manner which requires the customer to acknowledge receipt of the information and does not permit the customer to utilise the funds for gambling until they have done so, both on the first occasion on which the customer deposits funds and on the occasion of any subsequent deposit which is the first since a change in the licensee’s terms in relation to protection of such funds.
3. Where the licensee has selected a ‘not protected’ rating (as set out in the rating system specified by the Commission), it must remind the customer, once every 6 months, that their funds are not protected in the event of insolvency. The reminder must refer to the value of funds held for the customer. The licensee must require the customer to acknowledge receipt of the information and must not permit the customer to utilise the funds for gambling until they have done so.
4. In this condition ‘customer funds’ means the aggregate value of funds held to the credit of customers including, without limitation:
- cleared funds deposited with the licensee by customers to provide stakes in, or to meet participation fees in respect of, future gambling;
- winnings or prizes which the customer has chosen to leave on deposit with the licensee or for which the licensee has yet to account to the customer; and
- any crystallised but as yet unpaid loyalty or other bonuses, in each case irrespective of whether the licensee is a party to the gambling contract.
Assessing whether you hold customer funds Next section
The customer funds insolvency ratings system
Last updated: 9 September 2025
Show updates to this content
Content has been updated to reflect the changes to the requirement at paragraph 3 of ‘Licence Condition 4.2.1 effective from 31 October.