Consultation response
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.
Contents
- Executive summary
- Introduction
- 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
- - Proposal 9: Remote assessments
- - Proposal 10: Assessment framework
- - Proposal 11: Special Measures
- Summary of responses - Enforcement changes
Proposal 13: Financial penalties
Proposal
New paragraph for insertion after current paragraph 5.26
Whether a financial penalty is to be imposed following a review or without a review having taken place, the Commission may request financial information regarding the financial resources available to a licensee, including but not limited to its own resources and those of any parent or group company or ultimate beneficial owner. In the absence of sufficient information, the Commission will infer that the licensee has the resources to pay such financial penalty as is appropriate in the circumstances of the case.
Consultation question
- Q17. To what extent do you agree with this proposal?
Respondents’ views
The majority of respondents agree with this proposal and commented as follows:
- ensuring the Commission is transparent in explaining what information is considered to prevent arbitrary decisions
- not straying beyond legislative parameters under the Gambling Act 2005 ('The Act')
- not making unfounded assumptions as to what funds are available to a licensee or a third party’s inclination to pay a penalty on their behalf
- understanding the calculation of fines which should be standalone in reference to the breaches and evidence, and not starting from point of what is affordable
- ensuring this provision does invite unfairness to larger operators who may suffer more than smaller companies.
Those who supported the amendment felt that opaqueness of a licensee’s financial position could increase risks for consumers and that publicly traded organisation should be transparent in relation to its available resources.
Supportive respondents felt the Commission should start from a position of assuming the defined penalty is affordable with the onus on the licensee to prove otherwise whilst ensuring proportionality between the fine quantum and scale of breaches. One respondent stated the proposed change was reasonable and in accordance with the Commission’s existing powers.
Our position
The Commission intends to proceed with the proposed amendment.
We acknowledge views about the Commission publishing a formula explaining penalty calculations. It remains our position that to do so could encourage noncompliance by facilitating licensees to cost their actions, which could increase risk to consumers. Equally, we appreciate the need for licensees to understand what factors have informed our decision making and, mitigating and aggravating factors. The Commission will continue to ensure these elements are articulated in correspondence during the review.
The Act stipulates that the Commission will have regard to the affordability of a proposed penalty. The Act is not prescriptive on the definition of financial resources but for a group structure where dividends and loans are available to move monies around the group it follows that a licensee has more financial resources available to it than a stand-alone company and should be assessed accordingly. In addition, consideration of the group finances removes the ability of the licensee to move monies available to fund a penalty out of reach during the investigation period.
As with a licensee that appears to have financial resources available to fund a penalty, there is an opportunity to provide clarity and evidence on what funds are available or are not available in a group or a company to fund a penalty. On a case-by-case basis and proportionate to the identified failings, the Commission will decide what level of penalty is appropriate and whether it requires additional financial information from the business structure either prior to communication of the penalty or if affordability is raised during representations.
Proposal 12: Commencing a review of an individual licence Next section
Proposal 14: Suspension
Last updated: 22 June 2022
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