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Remote customer interaction: Consultation Response

This response document sets out our conclusions and actions in relation to the consultation around remote customer interaction.

Published: 14 April 2022

Last updated: 14 April 2022

This version was printed or saved on: 5 December 2022

Online version: https://www.gamblingcommission.gov.uk/consultation-response/remote-customer-interaction-consultation-response

Summary

In 2021, we closed a consultation and call for evidence on the steps operators should be required to take to identify customers at risk of harm and the action they should take as a result. We also conducted a short survey alongside this process.

This response document sets out our conclusions and actions in relation to the consultation. It also provides information about the next steps in relation to the call for evidence and the wider programme of work.

Having reviewed the consultation and connected short survey responses, we will:

Having reviewed the call for evidence and connected short survey responses, we will conduct a further consultation on the additional and specific steps operators must take to tackle three key risks with thresholds for assessment for each of these:

  1. unaffordable binge gambling
  2. significant unaffordable losses over time
  3. failure to identify consumers who are particularly financially vulnerable.

We will also take account of the Government’s current Review of the Gambling Act 2005 and continue to support a broader programme of work to support identification of customers at risk of harm. This includes:

Next steps

The publication of these new requirements will result in some queries for implementation. We will ensure these queries are addressed in the new guidance to which operators will be required to take into account. Our guidance will be published by early June. The changes to our Licence Conditions and Codes of Practice and the new guidance for remote gambling operators will both come into effect on 12 September 2022.

We will consult on additional requirements to tackle three key risks, with set thresholds for action for each one:

  1. unaffordable binge gambling
  2. significant unaffordable losses over time
  3. failure to identify consumers who are particularly financially vulnerable.

In summary the new requirement and guidance for remote operators will come into effect in September 2022 and the existing requirement and guidance will remain in place until that time.

Documents affected

Licence Conditions and Codes of Practice:

Customer interaction

Introduction

The consultation and call for evidence received 971 responses. We also conducted a short survey alongside this process. This survey received 12,125 responses. We have carefully considered the responses to the proposals we consulted on and the call for evidence. We have conducted a programme of engagement throughout the consultation with consumers, those with lived experience of gambling harms, the industry, financial sector and other regulators.

Our existing requirements place a duty on remote operators to monitor gambling and take action where there is a risk of harm. We had identified in our casework that, while remote operators had the ability to interact with those being harmed, they were not always doing so or acting quickly enough.

We wanted to hear feedback about tougher rules to tackle this, such as requirements to take action when online operators know a customer is in a vulnerable situation and to put in place some automated solutions. We also called for evidence on the spending, time and other thresholds at which checks or action should be taken.

The proposals only applied to gambling online – not on tracks or in gambling premises – and are part of our ongoing work to improve consumer protections in online gambling.

We put forward proposals to strengthen our requirements or to clarify existing requirements and guidance in the following ways:

Proposal 1

Require operators to implement effective customer interaction processes and follow the overall process of identify, interact/ act and to evaluate.

Proposal 2

Require operators to monitor an account from the point of opening, to use a set of minimum indicators of harm, to require timely flagging of indicators of harm (including feeding in to automated solutions) and to clarify that operators are responsible for implementing these requirements even where there is a third party provider. We also proposed that there would be additional requirements for specific indicators put in place now (vulnerability and time) and in the future (unaffordable gambling).

Proposal 3

Clarify that an operator must take action in a timely manner when potential harm is identified, and tailor that action to the nature of the indicators. For indicators that the operator classes as ‘strong’, we proposed that this must include automated solutions.

Proposal 4

Require operators to evaluate the effectiveness of their approach on the individual customer and the overall effectiveness of their approach.

We proposed that operators continue to be required to take into account the customer interaction guidance for remote operators and invited comment on draft content for that guidance.

We have carefully considered the responses to the proposals we consulted on and the call for evidence. Many people think there should be protections in place for the most vulnerable and that appropriate checks should be in place to identify and prevent cases of clearly unaffordable gambling. Many respondents emphasised that measures should be proportionate and targeted at those at risk of harm. At the same time, customers were also concerned about privacy and freedom of choice. We take that seriously.

We have concluded that the proposals from the consultation should be implemented with some amendments to reflect issues raised during the consultation – this means that we are now introducing new stronger requirements on operators to identify customers at risk of harm and to take action. We have also concluded that a further consultation on the topics of the call for evidence remains appropriate. We have worked with Government to take account of the current Review of the Gambling Act 2005. We are continuing to work with the financial sector and the Information Commissioners Office in order to identify appropriate sharing of data to facilitate these assessments. As a result, we will consult on minimum requirements for operators to conduct assessments when customers reach set thresholds to tackle significant unaffordable gambling and identify customers at risk of financial harm. This will include detailed requirements on operators for the thresholds and to consult on the use of safeguards to ensure that the principles of data minimisation and protection against misuse are upheld.

We will also continue our wider programme of work in this space.

Proposal 1 - Overall requirements and process

Overall requirements and process

The requirement to conduct customer interaction is an existing LCCP requirement. We proposed that this is retained and strengthened. We proposed that this is strengthened by specifying that operators must implement effective processes which reflect the ongoing process of customer interaction. In the consultation, we proposed that operators must build processes which include the need to identify risk, take appropriate action and evaluate the impact of that action. This wording was similar to the existing requirement on operators that has been in place since 2019. However, this proposal was to further embed the principle that customer interaction is an ongoing process that should be considered throughout the customer’s relationship with the operator.

Consultation questions on overall requirements and process

To what extent do you consider that the diagram (in the consultation document (opens in a new tab)) illustrates the ongoing and continued process which operators must deliver to identify harm to consumers and take action?

Do you have any comments on this overall process?

Respondents’ views on overall requirements and process

The majority of respondents to our consultation agreed with the proposed overall requirements and process for customer interaction. Many of these respondents had detailed comments about what needed to be in place to ensure that the process was effective.

A sizeable minority disagreed that the process was appropriate. Their reasons for disagreeing varied greatly. Many respondents focussed on the issue of affordability in their responses to this question, rather than on the overall approach.

The comments on this proposal included the following points:

Whilst this question did not focus on affordability, many of the comments did focus on this issue:

Our position on overall requirements and process

We have concluded that the new and stronger requirement to conduct customer interaction should be introduced, and that the requirement to take into account the Commission’s guidance for remote operators will remain in place accompanied by new guidance to be published in June. We have decided that these overarching requirements should apply in order to address the risks to consumers, accompanied by the detailed minimum standards that we have concluded are appropriate (set out in proposals 2, 3 and 4). It is important that operators recognise the continuous and ongoing nature of customer interaction.

The overall requirement to implement effective customer interaction is an important overarching requirement. It is also important that the Commission sets out guidance on how to meet the strengthened requirements and that operators are required to take this guidance into account. A number of elements of the current guidance are being upgraded to requirements through proposals 2 and 3. Together, this package sets out stronger and clarified requirements on operators.

In the consultation, we explained that the requirement is on operators to identify harm, take action and evaluate. However, the proposed LCCP provision used the wording ‘identify, interact, evaluate’. We have concluded that the LCCP provision should follow the wording and expectation set out in the consultation – ‘identify, act, evaluate’.

Many respondents, both those who agreed and those who disagreed with the proposal, commented that the overall process must allow the operator to tailor their response to the individual risks associated with a customer. We strongly agree that this is the case. This overall process continues to allow responses to be tailored, but provides greater emphasis on the action which operators take as a result of identifying indicators of harm.

Some respondents commented that there should be more prescription in how operators implemented this overall requirement and increased oversight on how operators did so. This is partly addressed by proposals 2 and 3 where we separately proposed stronger requirements on operators on the process for identifying customers at risk of harm and the scale of action by operators in response to those risks.

The issues raised by respondents in relation to identifying unaffordable gambling will be addressed and explored in more detail in the next stage consultation which we outline in the ‘next steps’ section of this response document.

Proposal 2 - Identifying customers at risk of harm

Identifying customers at risk of harm

Operators are already required to monitor gambling accounts to identify harm – we make clear in the existing guidance that this includes monitoring a customer’s account from the point of opening and we set out information on the indicators that should be used. However, we found that operators’ approaches were inconsistent and often missed key indicators that were available, including for new customers. We therefore proposed to require operators to:

We set out proposed additional requirements for specific indicators on vulnerability and time spent gambling. This meant that operators would be required to take action when they identify customers in a vulnerable situation, but not to screen all customers for vulnerability. It also meant that operators would have to flag unusual amounts of time spent gambling as an indicator of harm.

Consultation questions on identifying customers at risk of harm

Question 7: To what extent do you agree with the proposal that remote operators should be required to conduct affordability assessments at thresholds set by the Commission? Please see the Call for Evidence for questions on the appropriate thresholds.

Question 8: To what extent do you agree with the proposed requirement that remote operators must implement processes to take action where there are indicators of other forms of vulnerability (elevating this issue from guidance to requirements)? Please see the Call for Evidence for questions on experiences of vulnerability and what operators should do in response.

Question 9: To what extent do you agree with the proposal that remote operators must implement actions in relation to time spent gambling which are linked to the nature of the gambling provided? Please see the Call for Evidence for questions on experiences of vulnerability and what operators should do in response.

Respondents’ views on identifying customers at risk of harm

There was a wide range of views relating to assessments to identify unaffordable gambling. There were significant concerns about consumer privacy and freedom and calls for any such measures to therefore be targeted at the customers who are most at risk, and not general or what was often described as ‘leisure consumers’. Some stakeholders were strongly in favour of assessments to identify unaffordable gambling and called for the assessments to apply to all customers. We will explore these issues further in a future consultation which will consider requirements that will tackle three key and significant risks - unaffordable binge gambling, significant unaffordable losses over time, and identifying customers who are in a particularly financially vulnerable situation.

In relation to customers who may be in a vulnerable situation:

In relation to time, respondents to the consultation mainly disagreed that the Commission should set specific time indicators for different products, or that there should be a separate requirement for time as an indicator.

Our position on identifying customers at risk of harm

We have concluded that there must be an absolute requirement for a set of core indicators that operators must use to identify harm or potential harm. We consider it important to set these core indicators across all operators in order to drive more consistent minimum standards across the industry. The core indicators which we have concluded should be set as a minimum standard are:

This list now includes ‘time spent gambling’. We have concluded that the time indicator should be included in the list of indicators which operators must use. At this stage, we have concluded that we should not list this indicator as a separate requirement, nor should we set specific time thresholds for different products at which operators would have to conduct assessments. Operators are therefore able to implement time indicators that are suitable for their business and customers, but they must include time as one of the indicators of harm that they use.

Following consultation, we have retained the proposed requirement that operators would be required to monitor customer accounts for signs of harm from the point of opening. As we have seen in our casework, it is possible for customers to experience harm shortly after opening an account and for this harm to be significant. It is not appropriate to wait until an operator has information about a customer’s typical behaviour in order to identify if an action is unusual for that customer. Instead, it is important that unusual and risky patterns of behaviour are identified from account opening and action taken if necessary. It is still appropriate to identify changes in behaviour and consider that a risk flag, but not to ignore other signs which are apparent in the meantime.

We have also concluded that the proposed strengthening to specify that operators have responsibility for monitoring for each of these indicators of harm is necessary. In proposal 3, we also discuss taking action in a timely manner. This applies even where they use a third-party provider to offer their customers gambling products/games. The operator must always understand a customer’s gambling position. It is not sufficient to only be aware when a customer returns from using gambling products/games with a third-party provider.

We maintain that operators must consider the factors which make a customer more vulnerable to experiencing gambling harms and implement systems which allow indicators of vulnerability which are identified by the operator to be acted on. We reiterate the approach set out in the consultation that when an operator identifies that a customer is in a vulnerable situation, they should be required to act on such information. As was proposed in the consultation, this does not mean that all customers would be required to be screened for vulnerabilities as this may be intrusive for customers and disproportionate.

It is critical that operators understand that the core indicators are the minimum standards which must be met. Our guidance, which will be published by early June in order to reflect any queries from industry on the requirements, provides more detail on these indicators and sub-categories which should be considered by operators.

We will explore the issue of identifying unaffordable gambling and customers at significant risk of financial harm further in a future consultation. This consultation will consider requirements that will tackle three key and significant risks - unaffordable binge gambling, significant unaffordable losses over time, and identifying customers who are in a particularly financially vulnerable situation. We will work closely with Government to ensure that the consultation proposals are set in the wider context of the Government’s Review of the Gambling Act 2005.

Proposal 3 - Requirement to act

Requirement to act

We proposed in the consultation to clarify within requirements that:

Consultation questions on requirement to act

Question 10: To what extent do you agree with the proposal to require remote operators to interact in a timely manner, to interact at a level appropriate to the indicator, and to require automated solutions where necessary?

Question 11: Do you have any comments on the proposed requirement SR provision 4 to require remote operators to interact in a timely manner, to interact at a level appropriate to the indicator, and to require automated solutions where necessary?

Question 12: Do you have any comments on the proposed categorisation of customer interactions to help ensure that operator actions reflect the seriousness of the indicators of harm?

Respondents’ views on requirement to act

Where an indicator of harm has been identified, respondents from the short survey were significantly in favour of actions that helped a customer access tools to limit gambling in the first instance. Following this, they identified preventing marketing to a customer in this position as the second most relevant action. Setting a spending cap on the consumer and preventing them from gambling was supported by fewer respondents to the short survey.

Respondents to the main survey held mixed views.

Of those who were opposed to the requirements, many considered that the rules on operators should allow for no assessment of risk by the individual operator and that all action should be at the stronger end of the scale and implemented automatically.

Many who were supportive of the requirement overall were nevertheless concerned about implementation timetables and the impact on small operators. Some called for detailed guidance to be made available as a result.

A number of respondents were fully supportive of the requirements and considered that incorporating them into LCCP would significantly increase protections for customers.

Our position on requirement to act

We have concluded following consultation that operators must be required to take action in a timely manner when they identify the risk of harm. This is a reiteration and strengthening of our current expectations on gambling operators.

As some respondents commented, timely action will depend on the nature and severity of the indicator of harm. However, we found from our casework that many operators had a consistent format for interacting with customers which followed the same process and steps regardless of the number or severity of the risk indicators. Often this meant starting with a very early form of action such as sending an email. While emails are part of the toolkit available to operators, an email is not in and of itself an appropriate action to each and every indicator of harm, and more urgent and proactive steps are sometimes needed. We have therefore concluded that it is appropriate and necessary to require operators to tailor the type of action they take based on the number and level of indicators of harm exhibited, as proposed in the consultation. We have clarified the wording of this requirement following consultation to reflect that operators must tailor their processes in the following ways:

This approach reflects our position that some minimum standards must be set in LCCP in order to clarify our expectations and raise standards across the remote sector. Some respondents to the consultation considered that the Commission should specify the detailed action that must be taken for every indicator of harm or combination of indicators of harm. This would amount to a detailed set of algorithms set by the Commission and applied by all operators. The Commission considers that this would be disproportionate – it could require very detailed requirements taking account of every permutation of product and consumer risk. We are also conscious that this could lead to a tickbox approach by operators, where some risks and issues were missed as a result. Instead, we have taken this significant step to set minimum indicators of harm and clear requirements about tailoring the response to those indicators. However, the Commission’s guidance will support operators to comply with this requirement by giving clear guidance on examples of what is expected to be treated as strong indicators.

In addition, we have concluded that it must be a requirement on remote gambling operators to include automated solutions as part of this tailored approach. In some cases, it will be necessary to react to strong indicators of harm with automated steps. In the consultation we explored the data protection requirements related to automated processing. As a result, we have specified that the licensee must manually review their operation in each individual customer’s case and allow the customer the opportunity to contest any automated decision which affects them.

We have also concluded that operators must prevent marketing or the take-up of new bonus offers to customers where there are strong indicators of harm. We have therefore specified a firm requirement that the operator must prevent marketing or the take-up of new bonus offers for any customer where there are strong indicators of harm. This ensures that the customers who are most at risk of harm are not harmed by marketing and bonus practices.

Our customer interaction guidance for remote operators will continue to give guidance on what is seen as timely and tailored action. The guidance will also support operators to set ‘strong’ indicators of harm that are appropriate for the actions that are required when these indicators appear. This guidance is in line with the consultation proposals about strong indicators of harm. This guidance will be expanded over time by embedding operator good practice and as technology improves to support targeted and specific action for customers.

Proposal 4 - Evaluation of effectiveness

Evaluation of effectiveness

We proposed in the consultation to strengthen the existing requirement that operators’ must understand the impact of the interaction on the customer, as well as the effectiveness of the Licensee’s overall actions and approach.

Our formal guidance to remote operators already set out detailed information on how operators should assess the impact of their interaction on individual customers and adapt or amend their approach where necessary. In addition, we set out guidance on how the overall approach should be assessed, with cross-reference to the ABSG evaluation protocol.

We proposed a strengthening of LCCP, so that operators would be required to assess both the impact of their actions for individual customers and to assess the overall effectiveness of their approach.

Consultation questions on evaluation of effectiveness

Question 13: To what extent do you agree with the proposal to strengthen the existing requirement by specifying that remote operators must implement processes to understand the impact of their actions on individual consumers?

Question 14: To what extent do you agree that operators must take all reasonable steps to assess overall effectiveness of their measures?

Question 15: Do you have any comments on the proposed requirements to evaluate effectiveness?

Respondents’ views on evaluation of effectiveness

The short survey did not ask questions on this issue.

A number of respondents to the main consultation did not choose to respond on this topic.

Views on the value of evaluation by operators were very mixed.

In terms of individual impact on customers, many respondents felt that responsibility should lie solely or mainly with the customer to consider how to respond to a customer interaction. Some felt that such an evaluation led to a presumption of escalating actions. Others considered that customer interaction is only valuable if it is understood what impact it has for a customer.

Respondents were generally supportive of the value of evaluating the operator’s overall approaches. Some operators highlighted their concerns about evaluation expectations and sought additional support in guidance on what was required. Others criticised operators’ current approaches to evaluation and said it was not meaningful, but that if it were meaningful, it could significantly reduce harm. Many commented that taking account of best practice and ensuring a minimum level of evaluation was necessary and appropriate.

Our position on evaluation of effectiveness

We have concluded that the requirement to evaluate the impact of the individual actions on a customer’s behaviour remains appropriate and is indeed a fundamental part of customer interaction. It is necessary to assess whether there is continued risk of harm and if so, what further action is needed.

We have also concluded that the requirement to assess the overall effectiveness should be strengthened in line with the consultation. In order to be able to assess compliance, we have concluded that it must be a requirement on operators to maintain records of their evaluation and be able to provide evidence of such evaluation to the Commission.

Therefore, the proposed strengthening of these requirements to assess both the individual impact and the overall impact of the approach have been included in the LCCP requirements following the consultation. We have strengthened the requirement in both cases and expect operators to be able to demonstrate compliance.

Operators will be required to take account of problem gambling rates for the relevant gambling activity as published by the Commission, in order to check whether the number of customer interactions is, at a minimum, in line with this level. As the purpose of customer interaction is to identify customers at risk of harm, it is manifestly a failure if the numbers of customers being identified is lower than the problem gambling rates for the products. We recognise that some guidance will be helpful for operators to understand how to apply this requirement where there is more than one product and this will be addressed further in the accompanying guidance for operators. However, the requirement is clear - this is an absolute minimum requirement.

We have made clear, for the avoidance of doubt, that this provision is not intended to mandate the outcome of those customer interactions. The operator must tailor the action they apply to the nature and scale of the indicators of harm identified and/or the need to address continued risk with further action.

The LCCP provision

Following consultation, a new social responsibility code provision will be published shortly in LCCP and will come into effect from 12 September 2022. This provision is shown as follows. The associated new guidance for remote operators will be published in June 2022.

Social responsibility code provision 3.4.3 (with effect from 12 September 2022)

Customer interaction 

All remote licences, except any remote lottery licence the holder of which does not provide facilities for participation in instant win or high frequency lotteries1, remote gaming machine technical, gambling software, host, ancillary remote bingo, ancillary remote casino, ancillary remote betting, remote betting intermediary (trading rooms only) and remote general betting limited licences.

  1. Licensees must implement effective customer interaction systems and processes in a way which minimises the risk of customers experiencing harms associated with gambling. These systems and processes must embed the three elements of customer interaction – identify, act and evaluate – and which reflect that customer interaction is an ongoing process as explained in the Commission’s guidance (see paragraph 2).
  2. Licensees must take into account the Commission’s guidance on customer interaction for remote operators as published and revised from time to time (‘the Guidance’). 
  3. Licensees must consider the factors that might make a customer more vulnerable to experiencing gambling harms and implement systems and processes to take appropriate and timely action where indicators of vulnerability are identified. Licensees must take account of the Commission’s approach to vulnerability as set out in the Commission’s Guidance.
  4. Licensees must have in place effective systems and processes to monitor customer activity to identify harm or potential harm associated with gambling, from the point when an account is opened. 
  5. Licensees must use a range of indicators relevant to their customer and the nature of the gambling facilities provided in order to identify harm or potential harm associated with gambling. These must include: 
  1. In accordance with SR Code Provision 1.1.2, licensees are responsible for ensuring compliance with the requirements. In particular, if the licensee contracts with third party business-to-business providers to offer any aspect of the licensee’s business related to the licensed activities, the licensee is responsible for ensuring that systems and processes are in place to monitor the activity on the account for each of the indicators in paragraph 5 (a-g) and in a timely way as set out in paragraphs 7 and 8.
  2. A licensee’s systems and processes for customer interaction must flag indicators of risk of harm in a timely manner for manual intervention, and feed into automated processes as required by paragraph 11. 
  3. Licensees must take appropriate action in a timely manner when they have identified the risk of harm. 
  4. Licensees must tailor the type of action they take based on the number and level of indicators of harm exhibited. This must include, but not be limited to, systems and processes which deliver:
  1. Licensees must prevent marketing and the take up of new bonus offers where strong indicators of harm, as defined within the licensee’s processes, have been identified.
  2. Licensees must ensure that strong indicators of harm, as defined within the licensee’s processes, are acted on in a timely manner by implementing automated processes. Where such automated processes are applied, the licensee must manually review their operation in each individual customer’s case and the licensee must allow the customer the opportunity to contest any automated decision which affects them.
  3. Licensees must implement processes to understand the impact of individual interactions and actions on a customer’s behaviour, the continued risk of harm and therefore whether and, if so, what further action is needed.  
  4. Licensees must take all reasonable steps to evaluate the effectiveness of their overall approach, for example by trialling and measuring impact, and be able to demonstrate to the Commission the outcomes of their evaluation.
  5. Licensees must take account of problem gambling rates for the relevant gambling activity as published by the Commission, in order to check whether the number of customer interactions is, at a minimum, in line with this level. For the avoidance of doubt, this provision is not intended to mandate the outcome of those customer interactions.