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 5: Clarification of suitability criteria
Proposal
Updated paragraph 3.11
When considering the suitability of an applicant the Commission will look beyond the applicant itself and may for example consider those connected with the applicant such as: persons relevant to an application by reason of their being likely to exercise a function in connection with, or to have an interest in, the licensed activities, shadow directors, persons or other entities who are controllers of the applicant, ultimate beneficial owners. In respect of the applicant and others connected with the applicant the Commission has regard to the following elements and seeks evidence to support and enable an assessment to be made against each one:
- Identity and ownership - This includes the applicant’s transparency in relation to the beneficial ownership of the applicant and those who finance and profit from its operation.
- Finances - For operating licences this will include the resources likely to be available to carry out the licensed activities and the legitimacy of the source of the capital and revenue finance of the operation.
- Integrity - Honesty and trustworthiness. Willingness to comply with regulatory responsibilities, uphold the licensing objectives and work cooperatively with the Commission.
- Competence - Experience, expertise, qualifications, and history of the applicant and/or person(s) relevant to the application. Ability to comply with regulatory responsibilities, uphold the licensing objectives and work cooperatively with the Commission.
- Criminality - Criminal record of the applicant and/or person(s) relevant to the application.
Updated paragraph 3.22
The Commission will also want to ensure that it can establish who benefits from the gambling provided and therefore require that any shareholders with a 3 percent holding are listed and that those with over 10 percent holding complete an Annex A form to enable further checks to be carried out on them. This requirement is without prejudice to paragraph 3.13 above. If the beneficiary of any business is a Trust then the Commission will want to know who the beneficiaries of that Trust are.
Similarly, where a person or entity holds shares as a nominee the Commission will want to know who the true owners are.
Updated paragraph 3.27
The Commission will consider the evidence and findings of complaints about the applicant and investigations by other regulators. The Commission will look into the applicant and other relevant persons to see if there has been a history of problems or business failure and will use open source checks to assist with that. This involves an assessment of an applicant’s willingness to comply with regulatory responsibilities, uphold the licensing objectives and work co-operatively with the Commission.
Updated paragraph 3.28
The Commission will take up references and may review the CVs or employment history of the applicant or other relevant persons to assess their work experience and the training they have received which demonstrates their competence to carry out the role required of them. This involves an assessment of an applicant’s ability to comply with regulatory responsibilities, uphold the licensing objectives and work co-operatively with the Commission.
Consultation question
- Q9. To what extent do you agree that the amended wording, including additions on suitability, will assist operators in understanding how the Commission assesses suitability and supplying all the information needed for this with the application?
Respondents’ views
The majority of respondents agreed with the proposal and made the following comments:
- there should be an assessment of competence to do the role specified
- further examples and guidance are needed on who could be considered relevant persons and how the Commission assesses suitability
- should allow for applicants with potential competence and/or expertise for the role
- the guidance on source of funds needs to be defined more clearly in respect of ‘legitimacy’, for example it is not for the Commission to determine compliance with loan conditions but for the lender
- the additions do not provide the intend clarity as current wording gives us unfettered discretion to discharge our regulatory functions.
Respondents also made the following comments:
- in assessing Curricula Vitae (CVs) and experience the Commission is overstepping its role
- further examples and guidance are needed on who could be considered relevant persons and definitions of ‘shareholder’, ‘beneficial owner’ etc., and how suitability is assessed
- the need to differentiate between public and private companies, public companies do not choose their shareholders or who owns stock, suitability should be focused on board and management team
- define ‘willingness to comply with regulatory responsibilities’ and ‘history of the applicant’ and be clear about evidence requirements
- the Commission should take a balanced and risk-based approach as some connected individuals may already be approved or regulated by another regulator.
Our position
Whilst the Commission has made a minor amendment to the proposed paragraph, we do not intend to provide further examples of relevant persons within a policy statement. The Commission disagrees that the statement is jargon-filled and we do not intend to give further definitions of certain words as this is a policy statement.
Whilst an operator undoubtedly must consider the competence of people it employs, the Commission’s consideration of suitability must also include competence because we need assurance that individuals will not adversely impact the licensing objectives.
Where the Commission has concerns about an application, for example, because a person or entity has not demonstrated their willingness to comply with regulatory responsibilities, the Commission will set out specific examples related to that specific case in any correspondence with the applicant.
It would not be appropriate to differentiate between public and private companies; the suitability criteria apply to all applicants although the Commission will take a risk-based and proportionate approach when applying the criteria. This includes whether individuals or entities are already approved by the Commission or another regulator.
Proposal 4: Timescale for using licence Next section
Proposal 6: Clarification of financing arrangements
Last updated: 26 October 2023
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