Changes to protection of customer funds rating system come into effect on 29 April 2019

In December 2018 the Gambling Commission published an informal consultation on proposed amendments to the protection of customer funds rating system with a stated aim to “promote greater transparency and ensure consumers are empowered to make fully informed choices about their gambling”. That consultation ended on 14 January 2019.

The Commission has now published its response, in which it confirms that “most responses received supported the changes proposed … which will now come into effect on 29 April 2019”.

The changes to the rating system are shown in red below:

Customer funds insolvency rating system

Current ratings system

New insolvency ratings system (to be introduced 29 April 2019)

Not protected (No segregation – permitted for non-remote and ancillary remote operators only)

Not protected (No segregation – permitted for non-remote and ancillary remote operators only)

Basic (segregation of funds – minimum requirement for all remote operators who hold customer funds)

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Not protected (segregation of funds – minimum requirement for all remote operators who hold customer funds)

Medium (Quistclose or equivalent)

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Medium protection (Quistclose or equivalent)

High (Independent trust account)

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High protection (Independent trust account)

The Commission goes on to say:

The new amendments will clarify the level of protection afforded for customer funds in the event of insolvency and reduce the likelihood of consumers being misled. Operators are required to communicate any changes to new customers in accordance with LC 4.2.1. Operators must notify customers where the level of protection has previously been described as ‘basic’ but will now be described as ‘not protected’ on the occasion of any subsequent deposit after the change is made.

The informal consultation proposed to allow operators up to four weeks to implement any changes. Some responses stated this would be challenging due to potential circumstances which would be out of operators’ control (e.g. the updating of apps). For this reason, we have agreed to extend the implementation time to eight weeks which will enable operators to complete the changes in time.

It also draws attention to its updated guidance note titled “Customer funds: segregations, disclosure to customers and reporting requirements”, that (together with the Commission’s response document) can be downloaded below.