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Regulatory Panel Reform: Consultation Response

Regulatory Panel Reform: Consultation Response

Published: 21 July 2021

Last updated: 21 July 2021

This version was printed or saved on: 17 August 2022

Online version: https://www.gamblingcommission.gov.uk/consultation-response/regulatory-panel-reform-consultation-response

Regulatory Panel Reform: Consultation Response

Regulatory Panels ('Panels'), comprised of Commissioners, provide the opportunity for applicants / licensees to attend an oral hearing to challenge the decisions Commission staff are minded to take about personal or operator licenses.

In enforcement cases Panels make decisions on a wide range of issues; for example, whether an operator has breached the Licence Conditions and Code of Practice, and the most appropriate sanction that should be imposed.

In licensing cases Panels may make decisions on a variety of matters that are referred to them, such as deciding to grant or refuse licences where Commission officials are minded to refuse an application.

Panels provide an escalation option which allows for a decision to be made by senior persons who are separate from the enforcement and/or licensing case team. Their role is important in ensuring that decisions made are impartial, transparent and consistent. Our current approach to Panels has been in place since 2007.

We launched a consultation on changing our approach to Panels in May 2020. The consultation proposed introducing legally qualified Adjudicators as members of our Panels. The consultation also covered proposals to deal with the late admission of evidence, arranging a hearing and representations on financial penalties. The consultation included proposals to change the time limits relating to the submission of bundles, communicating decisions and the date by which financial penalties should be paid.

We have considered the responses to our consultation, which proposed changes to our Scheme of Delegation of licensing and regulatory decisions in respect of gambling, and our procedures and guidance documents in relation to Regulatory decisions and Licensing decisions as follows:

Having reviewed the consultation responses, we will:

Next Steps

The changes to the affected documents will come into effect during 2021 to 2022 once adjudicators can be recruited. We will provide 4 weeks notice of the date of change via the Commission website, and will apply to all Regulatory and Licensing decisions/requests for escalation to Panel made after that date.

Documents affected:

Introduction - Regulatory Panel Reform: Consultation Response

On 1 May 2020 we issued our consultation on Regulatory Panel Reforms. The consultations ran for 8 weeks until 26 June 2020.

We received 22 written responses to the consultation from the following categories of respondents:

Summary of responses - Regulatory Panel Reform: Consultation Response

Introduction

We put forward proposals to:

Proposal 1: Use of adjudicators on regulatory panels

Consultation question 4

Do you agree with the proposal to use adjudicators on regulatory panels?

Respondents’ views

The majority of respondents disagreed with the proposal. All the respondents who disagreed with the proposal provided comments to set out their concerns.

Broadly the key concern expressed by respondents was that the independence and impartiality of the Panel would be adversely affected by the proposal to use adjudicators. Respondents were generally of the view that the proposals would introduce inherent bias into the process and would generate conflicts of interest where adjudicators employed by the Commission would be reviewing Commission decisions. Some respondents questioned whether the Commission would be allowed to employ adjudicators as proposed under the current statutory guidance on delegated powers.

Several respondents commented that there was insufficient evidence available to support the proposals, with further details requested on the following points to inform their response:

A number of respondents queried the rationale for the proposals and suggested that the key concern for the Commission was reducing costs. One respondent queried the cost estimates of £1000 per day for adjudicators, noting that this would not be sufficient to attract appropriately qualified and experienced applicants. Several respondents noted that the proposed one day per year of training would not be adequate and would not be comparable to the wide experience of Commissioners.

A number of respondents expressed concerns that moving from a Panel of Commissioners drawn from a broad range of backgrounds to adjudicators coming only from a legal background would not enable Panels to draw on a broad range of experience.

Several respondents raised issues with the proposal that adjudicators would also offer legal advice to the Panel, in place of the current system where the Panel has an independent legal adviser. The following points were noted:

A number of respondents set out grounds on which they felt challenges to decisions made by adjudicators could be made. As a broad point, a number of respondents stated that the proposed changes would result in a) a loss of confidence in the system and process of Panels and therefore b) an increased number of appeals to the First tier Tribunal, leading to higher costs for Licensees, applicants and the Commission.

A minority of respondents agreed with the proposal. The only comment provided by these respondents queried the definition of ‘legally qualified’ in the context of adjudicators, noting that there remained a need for broad operational experience and knowledge in decision making.

Our position

Impartiality

Regarding the concerns raised about the impartiality of Adjudicators, as employees of the Commission rather than Commissioners, it is the Commission’s view that the use of Adjudicators does not affect the impartiality of decision-making.

The Gambling Act 2005 (opens in new tab) specifically allows for any function of the Commission to be delegated to an employee – even the most serious actions, such as the revocation of a licence can be dealt with by members of Commission staff.

We would also note that Commissioners cannot be considered independent from the Commission; by virtue of Schedule 4 to the Gambling Act 2005, the Commissioners are the Commission. Although Commissioners are not employees, they cannot be seen as independent from the body that they govern and represent. As the Adjudicators’ sole engagement with the Commission will be in relation to Panels they will have no vested interest in the outcome of a particular case. Indeed, it may be said that they will have less interest than the Commissioners they are set to supplement, who do have a responsibility for the performance and reputation of the organisation more widely.

The legal background of the Adjudicators is a further mitigating factor; they have the training and professional responsibility to act fairly and discharge their functions properly. It will also be a contractual term that they are required to determine any matter before on the basis of the law and the evidence alone, in accordance with the procedures published by the Commission.

It is also important to recall that Panels are the final tier of the Commission’s internal decision-making processes, not an independent judicial process; the fully independent scrutiny of Panel decisions comes from the right of appeal to the First-tier Tribunal.

Role and status of Adjudicators

We note that more information has been requested to assist people in understanding the role and status of Adjudicators. Before these changes come into effect, we will publish the draft role description and AGF. The AGF includes:

  • role and qualifications
  • training plan
  • arrangements for management and appraisal
  • operating framework.

We recognise the particular concerns raised regarding the appraisal of Adjudicators. As a result, the annual appraisal of Adjudicators will be undertaken by a Commissioner. Their performance objectives will, of course, not be linked to agreement with the views of Commission officials. The performance management process for Adjudicators will be outlined further in the AGF.

Taking account of concerns regarding impartiality, we intend to take further steps to maintain a degree of separation between Adjudicators and other Commission employees. The Governance team will manage and co-ordinate the Adjudicators, and facilitate their access to other corporate services (eg IT and People Services). Adjudicators will be home-based, and will not have open access to Commission offices, reducing the possibility of incidental contact with wider Commission staff. These ways of working will also be written into the AGF.

We acknowledge that Commissioners bring a range of skills to the governance of the Commission, however when sitting on a Regulatory Panel they are required to keep their focus narrowly on the issues at hand. We anticipate Adjudicators will have practiced law in a range of settings, and will bring their own range of experience. In order to ensure Adjudicators have an understanding of the wider gambling environment they will receive the same induction training about the operation of licensed operators as Commissioners. This is stipulated in the AGF. The approach to the quorum of a Panel in all matters not involving personal licences means that the Panel will have at least one member who is a Commissioner, such that the Panel’s decision-making remains informed by the range of skills and experience Commissioners bring.

Respondents raised concerns about the procedural fairness of the Adjudicator taking over the legal advisory role in a Panel hearing. We do not agree and note that the proposed model replicates that used by other regulatory bodies; for example, the General Medical Council has in the past five years moved to a model of legally qualified Tribunal chairs and removed the legal advisor role. To ensure fairness, the AGF stipulates that in every matter before a Panel, an explanation of what the Panel/Adjudicator understands the law to be, on which they/he intends to rely, will be set out in a manner which enables the parties to challenge it and make submissions on it if they wish to do so.

The case for change

We were asked to provide further information about the current caseload.

In 2020-21 Panels were convened on four occasions, generating 1,741 pages of submissions for the Panel to consider, with a cost estimate to the Commission of £8,395 (for Panel and Governance time only – no legal costs are reflected). A further four hearings were requested by Licensees and subsequently withdrawn, resulting in the Commission incurring costs in preparation and management of 2,289 pages of submissions.

In 2019-20 Panels were convened eight times, generating 9,422 pages of submissions to the Panel, with a cost estimate to the Commission of £20,170 (for Panel and Governance time only – no legal costs are reflected). Two of the hearings were withdrawn at short notice by the Licensees resulting in the Commission incurring costs in preparation, Panel time and the management of just under 6,000 pages of submissions.

We do not consider that the number of Panels being convened reflects the totality of the burden placed on Commissioners through the work of Panels. In particular, we remain of the view that cases are becoming increasingly complex, with applicants asking the Panel to take decisions on matters of case management and procedure as well as matters of fact. In any event, the use of legally qualified Adjudicators will both better enable the Commission to deal with an increasingly legalised internal process, and will free the time of Commissioners to be spent on leading and overseeing the work of the Commission.

We were asked to provide examples of other regulators using a mixed model of decision-making. There are examples of this in health regulation (the General Medical Council, for instance), and in other regulated areas (Ofqual). However, we do note that there is no common statutory model for regulators, so decision-making processes do vary.

Proposal 2: Changes to the ‘Scheme of Delegation of licensing and regulatory decisions

Consultation question 5

Do you agree with the proposed changes to the ‘Scheme of Delegation of licensing and regulatory decisions in respect of gambling’?

Respondents’ views

The majority of respondents disagreed with the proposal. Almost all of the respondents who disagreed with the proposal provided comments to set out their concerns. Respondents opposed to the proposal noted the following concerns:

With specific reference to Personal Licence cases, respondents broadly welcomed a change to the current process where an Executive Director can review a ‘minded to’ recommendation by a fellow Executive Director.

Several respondents acknowledged that while there are cases where it would be desirable to exclude an individual from the industry through Personal Licence hearings, decisions about Personal Licences have significant impacts on careers and reputations and should not be taken by one individual.

One respondent suggested that the scheme of delegations is amended to enable licensees to request a Panel hearing in cases where a regulatory settlement is proposed. It was requested that a full process for regulatory settlements should be published by the Commission.

Several respondents agreed with the proposal, noting the need for people with relevant experience to be included in the Panel and requesting further details on the appeals process. Two respondents indicated they agreed to the proposed changes with the exception of the use of Adjudicators.

Our position

Concerns were raised that Adjudicators would not be Commission employees. We confirm that the Adjudicators would be employees of the Commission, and therefore fall within the statutory framework of delegation in Schedule 4 of the Gambling Act 2005. We see no legal or practical difficulty in employing Adjudicators for this specific function.

We do not consider that there is any legal requirement for the quorum of a Panel to be set at a minimum of three, and note the current quorum for a Panel dealing with operator licenses is two Commissioners. In light of concerns raised in the consultation, we intend to amend our proposed quorum provision to a minimum of one Commissioner and one Adjudicator for matters relating to an operating licence, with an expressly stated proviso that the Panel will normally comprise two Commissioners and one Adjudicator. This being the normal position provides flexibility to address situations where one Commissioner becomes unavailable at short notice, but seeks to preserve the range of skills and experience Commissioners can bring to Panels, as well as maintaining direct Commissioner awareness of the work of Panels. We note that this also closely mirrors the position before the Tribunal (and indeed other Tribunals), whereby some hearings are determined by a Judge alone, some are determined by a Judge sitting with two lay members, and it is possible in some cases for a Tribunal to consist of one Judge and one lay member. We believe this strikes an appropriate balance in the circumstances.

In keeping with the status of the Adjudicator as the legally qualified member of the Panel, they will act as Chair for each meeting of the Regulatory Panel that they attend. This is clarified in the amended guidance and will be part of the AGF.

We also maintain that single Adjudicator hearings are a suitable mechanism to manage personal licence matters, which are currently heard by a single Executive Director. The AGF will also apply to these hearings, including the proviso that the legal position of the Adjudicator will be made available and representations can be made. We note that some respondents viewed a single Adjudicator as more likely to be impartial than an Executive Director.

We intend to continue with our proposal to enable Panels to occasionally give a steer on regulatory settlement proposals and or indication of an appropriate figure for a financial penalty at the request of Commission staff. We have no plans to take forward the suggestion that Panels should be required to decide on all regulatory settlements or financial penalties. We note that licensees have the option to request a Panel hearing where regulatory settlement offers have been rejected or where they disagree with the Commission’s proposed sanction.

Details of the process for appealing regulatory decisions (opens in new tab) made by the Gambling Commission can be found on the GOV.UK website.

Proposal 3: Changes to the Regulatory decisions: procedures and guidance for regulatory hearings

Consultation question 6

Do you agree with the proposed changes to ‘Regulatory decisions: procedures and guidance for regulatory hearings’?

Respondents’ views

The majority of respondents disagreed with the proposal. Almost all of the respondents who disagreed with the proposal provided comments to set out their concerns.

Respondents opposed to the proposal noted the following concerns:

With respect to the steer process for regulatory settlements, several respondents suggested that the opportunity to request a steer should also be open to licensees and applicants.

One respondent suggested that the Commission consider the Early Neutral Evaluation dispute resolution model ('ENE') whereby an independent and impartial evaluator provides an assessment on the merits of each party’s case which may serve as a basis for settlement and/or narrowing the issues.

Clarification was requested on the proposed guidance on the definition of ‘ordinary’ (Para 1.10), ‘good reasons’ (Para 2.9), and points on timing, as well as details on ‘late stage’, ‘necessary’ and the reference to ‘fairness to both parties’.

One respondent suggested that any proposals relating to process and procedures should also be made reciprocal in that there should equally be minimum turnaround deadlines imposed on the regulator.

Respondents who indicated their agreement with the proposals noted the need for people with relevant experience to be included in the Panel. Two respondents indicated they agreed to the proposed changes with the exception of the use of Adjudicators.

Our position

We note the concerns raised about the need to produce documents 21 days in advance. However, we also note that Panel dates are usually arranged months in advance (except for suspension hearings, where urgency is obviously important and timescales are necessarily compressed), and that it is in the interests of good decision-making to give the Panel and the parties sufficient time to familiarise themselves with case material. We therefore intend to retain the proposed change to 21 days.

As regards the suggestion that the extension in service time should be reciprocal as between the Panel and the Licensee, we note that the Panel will have had no engagement with the case until submissions are received, whereas Commission officials and the Licensee will be much more familiar with the material, having been involved in the case for considerable time in advance of service of submissions.

Regarding concerns about the requirement to have a “good reason” to present late submissions, and a lack of specificity about what a “good reason” might entail, we intend to make the changes as proposed. We consider that this requirement provides appropriate scope for the Panel to handle issues on a case by case basis with fairness and discretion, whilst also balancing the integrity of decision-making by ensuring the Panel and the parties to it have had sufficient time to review relevant material. We do not consider that an exhaustive definition of a “good reason” could practically be provided, and would in any event risk the Panel being unable to act fairly in any particular case.

The Commission maintains that an Adjudicator can act as both legal adviser and panel member and considers that no procedural unfairness arises.

We acknowledge concerns about the viability of proposals to offer 3 hearing dates over 2 months, and note the proposal that we should instead offer 4 dates over 3 months. We intend to adopt the proposal of 4 dates over 3 months to better enable parties to be represented by their representatives of choice. However, the Commission does not consider that there is an absolute right to have a Panel hearing listed for the convenience of a party’s representative, and a departure from the 4 dates offered will only be permitted in exceptional circumstances so as to ensure a fair and prompt resolution of the issues.

Given that the Adjudicator will be a legally qualified person, we also intend to amend guidance to indicate that any Case Management Hearings will be heard solely by the Adjudicator.

We noted the suggestion of an ENE stage, but do not intend to pursue this option at this time.

Proposal 4: Changes to the Licensing decisions: procedures and guidance for licensing hearings

Consultation question 7

Do you agree with the proposed changes to ‘Licensing decisions: procedures and guidance for licensing hearings’?

Respondents’ views

The majority of respondents disagreed with the proposal. All those who provided comments in support of their response did so with reference to their previous answers.

Our position

Our response is covered in our response to previous answers.