UKGC offers clarity on financial risk checks in the wake of new proposals

UKGC offers clarity on financial risk checks in the wake of new proposals - Banner
Paul Clare
by Paul Clare Last updated:

UK Gambling Commission CEO, Andrew Rhodes, has stepped forward to clarify “misunderstandings” surrounding new financial risk checks, currently out for consultation as part of the government’s Gambling Act review white paper.

Rhodes, who heads the regulator, published a blog post tackling what he sees as “the most frequent misconceptions” around the policy, highlighting a “very high level of misunderstanding” of the proposals around financial risk checks and what they could mean for operators.

Risk check proposals

The proposals would see some customers subject to a credit check, with no impact on credit score, to identify potential risk, in a process that could be largely automated by operators. In the event customers have no credit rating (estimated at around 0.3% of accounts), payslips or bank statements would be required, with the alternative of connecting through open banking for risk analysis.

Other proposals will also see vulnerability checks conducted on up to 20% of accounts (so-called “light touch”). However, the majority of accounts wouldn't be subject to any checks at all. 

The proposals come as part of government moves to tighten up gambling regulation in the UK, with a focus on reducing gambling harm on vulnerable groups and preventing more people from falling into problem gambling patterns.

Consultation has been underway for several weeks, with over 1,500 responses received to date—many of which speak specifically about the proposals around these vulnerability checks. With a few weeks left to run on the consultation, the Commission has launched a series of Q&A features, aiming to address confusion around the policy proposals and what they could mean for customers and the industry.

On the financial risk checks, Rhodes said the aim was to present a streamlined route for operators to highlight vulnerable gamblers, and take steps to better understand who is at risk when gambling through their platforms.

“The aim of these proposals is to provide a more frictionless system benefiting consumers as they would not need to manually provide data and the data provided would be minimised and protected against misuse.”

“The proposals would also benefit operators in having a clear understanding of requirements and allowing a frictionless system which is not currently available.”

"Light touch" and full risk assessment explained

The consultation presents two options for consideration, "light touch" financial checks and full financial risk assessments. The "light touch" option would kick in where players are seen to be sustaining “unusually high loss levels where it seems proportionate to understand more about the potential risk of harm.” This is proposed to be triggered “at £125 net loss (accrued bonus funds and re-staked winnings would not be included) within a rolling 30-day period or £500 within a rolling 365-day period.”

More thorough financial risk assessments would kick in at losses “greater than £1,000 within a rolling 24 hours or £2,000 within 90 days (again, accrued bonus funds and re-staked winnings would not be included).”

The Commission highlighted that most customers subject to these provisions would fall within the light touch category, which is much less intrusive. For those where losses are more sustained, the more thorough option of financial risk analysis would be triggered, requiring operators to establish whether there was a risk of financial harm.

Gambling industry raises concerns

The proposals have been met with considerable opposition in the first few weeks of consultation, with many industry voices raising concerns that this could push more people to the unregulated market—where checks of this kind will not be conducted.

The dangers of the unregulated sector are indeed much broader, with none of the other UK regulatory measures applicable or enforced within the illegal sector.

In his blog post, Rhodes said this was not an argument he accepts, suggesting the UK is and should remain a leader in providing a safe, regulated environment for gambling.

“We will never accept the argument that because an illegal online option exists, this should imply that the regulated gambling sector should maintain lower, less fair, or less safe standards. Britain is, and must remain, a world leader in providing consumers with a fair and safe gambling market.”

The proposals remain under consultation for several weeks to come, with the Commission and the government seeking guidance from industry stakeholders on the potential impacts of these, and other, policy suggestions.

While there is an understandable desire to tighten up protections for problem gamblers, many voices within the gambling sector have raised concerns about the impact on customers more broadly, and the potential for inconvenience to their customers.

In response, the Commission described this as “the key myth” it is hearing in response to the measures.

“We have proposed a system of proportionate checks to target only the very highest spending customers where the impacts of any harm may be most severe.”

“Proposed light touch financial vulnerability checks would be carried out on around 20% of accounts and most of those checked will not be impacted unless serious concerns are raised and the operator takes some action to support that customer.”

“It’s estimated that just the very highest spending 3% of accounts would undergo financial risk assessments.”

It remains to be seen whether the clarifications offered by Andrew Rhodes go some way to addressing the concerns raised by industry representatives so far.