We have already reported on the forthcoming LCCP changes on age and identity verification for remote gambling. In today’s consultation response document relating to those changes (that can be downloaded below), the Commission has confirmed that:
- it is “not proposing at this stage to introduce a specific licence condition or code to require mandatory account limits” but
- it is encouraging remote gambling operators “to collaborate in developing approaches to assess the levels of gambling that a customer might be able to afford”.
Those comments arose from the Commission’s intended plan (expressed in its review of online gambling) to:
- ensure that operators set limits on consumers’ spending until affordability checks have been conducted (a subject of much discussion at ICE this week), and
- consult on requirements for licensees to set limits on customers’ gambling activity that could only be changed once the licensee had further verified information about the customer.
In the above respects, in last September’s consultation on age and identity verification, the Commission requested information or evidence of good practice (both in terms of existing practice and what is possible) that helps licence-holders and customers to ensure that gambling remains fair and safe.
Some of the questions it posed in relation to that were expressly directed at the issue of affordability, including the following:
- Q25: What types of information are you able to access that could help inform you as to how much a new customer might be able to afford to gamble?
The Commission has now summarised the responses to that question as follows:
5.8 Most consumers responded that licensees could access information relating to a customer’s financial circumstances, such as showing bank statements, proof of income, and credit checks.
5.9 Third party providers suggested that licensees could analyse income and expenditure, with a number suggesting using socio-demographic data, or negative financial information to form an understanding of affordability. One provider explained that there is the ability to perform affordability checks through open banking. Another respondent said that a customer’s lifestyle could inform a licensee about how much they could afford to gamble.
5.10 A small number of licensees responded that they could access information from social media profiles to help inform them as to how much a customer could afford to gamble, specifically Twitter, Facebook, and LinkedIn. Licensees did note however that although they could use this data, the information gathered can be unreliable.
5.11 Other licensees suggested asking a customer for source of wealth and income, however not all mentioned how and when they would request this. Some highlighted the intrusion and restrictions of asking for this information, and others mentioned that this data would be asked for when a “customer exceeds a certain amount of money.”
5.12 One licensee stated that it had developed an algorithm which looks to predict an estimate for weekly disposable income based on ONS data; this is still being tested.
Other questions directly related to affordability were:
- Q35: Do you consider socio-demographic or economic data, that is not specific to the customer’s identity, but which could help to inform an assessment of what they might be able to afford to gamble? (e.g. postcode deprivation indices)
- Q36: And could these be used to inform limit setting?
The Commission has summarised the responses to those questions as follows:
5.41 A large number of licensees said that they consider socio-demographic or economic data that is not specific to the customer’s identity. As mentioned previously, the RGA is currently working on an affordability model which would take socio-demographic data into consideration during an affordability assessment.
5.42 Some licensees were conscious that socio-demographic data has limited accuracy or specificity for the individual, and therefore does not offer a current reflection of a consumer’s current financial situation. Other licensees gathered and considered such data (including postal address) during further due diligence, with others beginning a trial of postcode affordability data or building an algorithm which looks to predict an estimate for weekly disposable income based on data from the ONS, although these are yet to be tested. One licensee stated that they use this data during account review, especially if a customer is spending a large amount, is a young person, or is a student. In these cases, source of wealth is asked for and this is usually as part of the AML or responsible gambling process.
5.43 The majority of licensees thought that socio-demographic and economic data could be used to inform limit setting.
Other questions relevant to the issue of affordability included:
- Q33: What information have you already acquired from the application of any limits on your customers’ accounts?
- Q34: What information have you gathered from your enforcement of these limits as part of your customer interaction processes?
- Q37: Do you verify any economic information specific to the customer (e.g. credit scoring data, employment history or indicators of income and expenditure) as part of your risk’s assessment?
The following supplementary questions were also asked through the ‘Survey Monkey’ portal:
- Q: What do you think of the idea of gambling businesses setting limits on a customer’s gambling until they know more about them?
- Q: What information should a gambling business use to decide whether to change or remove a limit?
In today’s consultation response, having considered the answers received to the each of the above (and other) questions, the Commission summarises its present position as follows:
5.53 We welcome the responses to these questions from licensees, consumers and third parties, and we will use the feedback to continue to develop our work in this area. We will continue to engage with remote gambling licensees and encourage them to collaborate in developing approaches to assess the levels of gambling that a customer might be able to afford. This will form part of our broader work with licensees and financial institutions to better understand the range of accessible data and how it could inform mandatory limit setting, before we consider consulting on options at a later date.
5.54 We note the concerns raised by consumers regarding the purpose of any such checks, and the related issues of data security and privacy. In progressing our work in this area, we will consider the balance that may be needed between allaying these concerns and the opportunities for stronger consumer protections that could be delivered.
5.55 We will consider the responses submitted as part of this call for information when reviewing and updating our customer interaction guidance, and we will publish a consultation on the customer interaction elements of LCCP in February. Licensees should take account of the details submitted as part of this call for information, as outlined in this section, when reviewing their own approaches to harm prevention.
We will report further on this ‘affordability’ issue once the Commission’s consultation on the customer interaction elements of the LCCP has been published later this month.
UPDATE: The Commission published its consultation on customer interaction on 14 February 2019. We have reported on that here. The consultation document states the following in relation to the issue of ‘affordability’:
Life events or changes to an individual customer’s circumstances may mean that a person becomes more or less vulnerable to gambling harms. Those circumstances could include bereavement, loss of income or a sudden windfall, health issues or other events which could mean an increased risk of harm. It will not always be obvious or clear to an operator when such events have occurred but knowing your customers can help to determine whether those individual circumstances present an increased risk.
“Knowing your customer” can also include information such as the demographic profile of the locality in which they are resident, as such information could indicate levels of affordability i.e. information about a customer’s potential income level or occupation. This can also include observed knowledge about a customer’s ‘regular’ gambling patterns or behaviours.
In our Consultation on age and identify verification, we sought views around affordability, for example on the type of information that operators could access to help inform them as to how much a new customer might be able to afford to gamble. We asked for examples of good practice in relation to both existing practice and what is possible. We have recently published our response document, which sets out suggestions around the ways in which to identify affordability.
Effective monitoring processes enable operators to spot when a customer’s gambling activity may indicate an increased risk of harm. How operators monitor a customer’s gambling varies significantly depending on the type of product, place and provider. We think that effective monitoring processes are essential to enable operators to meet the outcome of reducing the risk of harm, and some examples of different ways to monitor activity are set out in the customer interaction guidance.