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Statement of principles for determining financial penalties

The Commission's statement of principles for determining financial penalties.

Published: 1 June 2017

Last updated: 9 February 2021

This version was printed or saved on: 4 December 2021

Online version: https://www.gamblingcommission.gov.uk/policy/statement-of-principles-for-determining-financial-penalties

Introduction

The purpose of this statement of principles for determining financial penalties

1.1 This statement sets out the principles that the Gambling Commission (the Commission) will apply and have regard to in exercising its powers to require the holder of an operating licence or the holder of a personal licence to pay a financial penalty.

1.2 This statement of principles applies both to circumstances in which the Commission exercises its powers to impose a financial penalty under section 121 of the Gambling Act 2005 (opens in new tab) (the Act), or when the Commission is considering the matter of a payment in lieu of a financial penalty as part of a regulatory settlement with a licensee. Therefore references to financial penalties within this document should also be read to include payments in lieu of financial penalties.

The framework of policies and procedures

1.3 The Commission has developed a number of policies which govern how it carries out its statutory functions. As such this document needs to be read in conjunction with the following documents:

1.4 Section 121 of the Gambling Act 2005 (opens in new tab) provides that the Commission may require the holder of an operating licence to pay a penalty if the Commission thinks that a condition of the licence has been breached. The Commission may impose a financial penalty following a review under section 116(1) or (2) of the Act (opens in new tab). The Commission also has the power to impose a financial penalty without carrying out a licence review. Once a financial penalty has been imposed the Commission pays received monies into a Consolidated Fund, once it has deducted its costs and a reasonable share of its expenditure, as set out at section 121(5)(c).

The scope of this document

1.5 Section 121(6) of the Act requires the Commission to, among other things, prepare a statement setting out the principles to be applied by decision makers in exercising the Commission’s powers to impose financial penalties, and to have regard to the statement when exercising a power under this section. The Commission shall review this statement of principles from time to time and revise it when it thinks necessary.

Key considerations

1.6 In exercising its powers to impose a financial penalty the Commission will have particular regard to:

Applicable principles

The purpose of imposing a financial penalty

2.1 The primary purpose of the Commission’s exercise of its regulatory powers is to protect the interests of consumers and the general the public and uphold the licencing objectives. This may, indirectly, have a punitive effect on the licensee. The primary aims of financial penalties will be to:

Criteria for the imposition of a financial penalty

2.2 By virtue of section 121(7), in considering the imposition of a penalty, the Commission must have regard to:

2.3 A financial penalty may be appropriate in the following circumstances (the list is not exhaustive):

2.4 A financial penalty will not normally be used in the following circumstances (the list is not exhaustive):

Criteria for determining the quantum of a financial penalty

2.5 Although the Act (opens in new tab) does not set a limit for a financial penalty, a penalty will be set at a level which the Commission considers to be proportionate to the breach. It will take into account the financial situation of the licensee where this information is provided to the Commission. A financial penalty allows the Commission, amongst other things, to eliminate any financial gain or benefit from non-compliance.

2.6 The total amount payable by a licensee will normally be made up of two elements:

2.7 The Commission will approach any financial penalty in the following way:

2.8 In determining the appropriate financial penalty, the Commission will take into account all the other circumstances of the case, which may include (the list is not exhaustive):

Discount to the financial penalty

2.9 The Commission, in considering the quantum of a financial penalty, will pay particular attention to any timely, voluntary admissions and/or disclosure made by a licensee where concerns have arisen. It will invariably be in a licensee’s interests to be full, frank and open with the Commission. In appropriate cases credit may be given for this in the form of a discount from any financial penalty (see step 5 at paragraph 2.7, above), or from any payment in lieu of a financial penalty made as part of a regulatory settlement. Such discounts will apply to the penal element of the fine and not to any gain and/or detriment that has been identified by the Commission.

2.10 The size of the discount will reflect the stage at which the agreement is reached in the context of the investigation, licence review, or regulatory settlement procedure.

Procedural matters

2.11 Section 121 imposes a number of procedural steps which must be taken before the Commission can impose a financial penalty. Before imposing a requirement on a licensee to pay a penalty under this section the Commission must notify a licensee:

2.12 The Commission will normally give licensees 14 days to make representations.

Time limits

2.13 By virtue of section 121(3) the Commission may not give a notice in respect of the breach of a condition after the end of the period of two years beginning with the day on which the breach occurred or began to occur, or, if later, the day on which the breach came to the knowledge of the Commission.

Payments in lieu of financial penalties

2.14 Payments made in lieu of a financial penalty as part of a regulatory settlement do not need to be paid into the Consolidated Fund as financial penalties imposed under section 121 do. As a result there is more flexibility about how such monies may be used. However, The Commission will apply the following principles in approaching such agreed payments: