Affordability at the fore of the UKGC’s Remote Customer Interaction Consultation & Call for Evidence

The Gambling Commission has today (3 November 2020) published its “Remote Customer Interaction Consultation and Call for Evidence” that closes on 12 January 2021.

It proposes:

1. retaining the existing LCCP requirement to deliver customer interactions in a way that minimises the risk of customers experiencing harms associated with gambling

2. imposing additional LCCP Social Responsibility Code provision 3.4.1 requirements along the following lines in relation to specific measures that remote operators will be required to deliver – note in particular requirement 3 that will require defined affordability assessments to be conducted at thresholds set by the Commission:

      1. Customer interaction processes: Licensees must implement effective customer interaction processes which embed the three elements of customer interaction – identify, interact and evaluate – and which reflect that customer interaction is an ongoing process
      2. Indicators of harm: Licensees must:
        • have in place effective systems and processes to monitor customer activity to identify harm or potential harm, from the point when an account is opened. The system must flag indicators of risk of harm in a timely manner for manual intervention and feed into automated protections as set by requirement 4 below
        • must use a range of indicators relevant to their consumers. These must include consumer spend, patterns of spend, time spent gambling, gambling behaviour indicators, customer-led contact, use of gambling management tools and account indicators.
      3. Requirements for specific indicators: Licensees must:
        • follow set requirements for specific indicators:
          • conduct affordability assessments at a specified level. The definition of relevant affordability assessments will be provided – and different types of assessments may be set at different levels [See our below summary on affordability – clearly the main focus within this Consultation and Call for Evidence]
          • consider the factors that might make an individual more vulnerable to experiencing gambling harm and implement processes to take appropriate and timely action where indicators of vulnerability are identified. Licensees must take account of the Commission’s definition of vulnerability
          • implement actions specific to time spent gambling which is appropriate to the nature of the gambling provided
      4. Requirement to act: Licensees must:
        • interact and take appropriate action in a timely manner when they have identified the risk of harm
        • tailor the type of action they take based on the number and level of indicators of harm exhibited. Importantly, this may mean taking strong or stronger action straight away, rather than increasing action gradually. This will include giving consideration to refusing service or ending the business relationship where necessary
        • ensure that strong indicators of harm are acted on in a timely manner by implementing automated solutions where necessary
      5. Evaluate: Licensees must:
        • implement processes to understand the impact of individual interactions and actions on a consumer’s behaviour, the continued risk of harm and therefore whether/ what further action is needed
        • take all reasonable steps to evaluate the effectiveness of their overall approach – for example by trialling and measuring impact. Licensees must take account of problem gambling rates for the gambling activity to check whether the number of customer interactions is at the least in line with this level.

3. creating a new remote customer interaction ‘manual’ (in place of the existing remote customer interaction guidance) that will “reference the LCCP requirements and set out implementation guidance on how to meet each of these requirements”.

Affordability

This Consultation and Call for Evidence will have far-reaching consequences as far as UK licensed remote gambling operators are concerned.

Most notably, and as indicated above, the Commission is proposing “to introduce stronger requirements, including that operators must conduct defined affordability assessments at thresholds set by the Commission“.

This will clearly be welcomed by the Gambling Related Harm All-Party Parliamentary Group that, in June 2020 (in its Final Online Gambling Harms Inquiry Report), called for affordability limits to be set and imposed by the Gambling Commission. Some UK licensed operators are likely to be less happy.

The Commission’s Call for Evidence accompanying today’s Consultation asks, amongst other questions:

  1. what the thresholds for these affordability assessments should be,
  2. about the nature of these affordability assessments (with the Commission proposing that an affordability assessment is undertaken if certain loss thresholds are reached) and
  3. how operators are required to protect consumers following an assessment.

On the subject of affordability thresholds, the following extract from the Call for Evidence should be particularly noted, resulting – as it has – in suggestions from some commentators that the Gambling Commission is contemplating a £100 loss limit as the threshold for a mandatory affordability assessment:

Whilst the Commission will consider all the evidence in response to this consultation and call for evidence, we are clear that it is not now nor will it be permitted in the future for gambling operators to set thresholds for action at levels that are unrealistic, of the level which has been tackled in our enforcement activity. For example, cases where thresholds are set at tens of thousands are not appropriately taking into account the evidence base on affordability, and may not be addressing the Know Your Customer (KYC) and Anti-Money Laundering (AML) duties in any case.

Therefore, it may be worth considering that the Commission does not currently consider that a threshold in excess of £2000 would be realistic or appropriate, and indeed the evidence base may point to a threshold considerably below this. This is linked back to the evidence about discretionary income which shows that 98% of population have less discretionary income than this threshold. As we have noted, it would not be expected that anyone could spend their entire discretionary income on gambling without experiencing harms ……

…… the Commission’s evidence to date would not indicate that it would be proportionate to require customers to be subjected to affordability assessments for small, infrequent gambling at a level which would be affordable to most of the population, or where gambling at those levels is extremely unlikely to cause financial hardship. This means that we are not – based on the evidence so far – considering a ‘licence to gamble’ which would require affordability checks to be conducted as a solely pre-emptive action for all consumers. This may indicate that the lowest possible threshold is likely to be at least £100 loss per calendar month.

In addition to its call for evidence on affordability thresholds and action, the Commission invites evidence on:

  • protecting consumers in a vulnerable situation
  • time spent gambling thresholds and action
  • preventing marketing and the take-up of bonus offers
  • impact and unintended consequences

You can:

Commenting on the Consultation and Call for Evidence in the Commission’s website announcement, its executive director Tim Miller says:

Whilst some operators have continued to improve their customer interaction processes, our evidence shows that many online operators are not setting thresholds for action at appropriate levels. They are not taking the appropriate action or acting quickly enough when they do identify risks of potential harm.

We are clear on the need for gambling companies to take further action and that the Commission must set firm requirements to set consistent standards. But we want to have an open discussion with the gambling industry, consumers, people with lived experience and other stakeholders, to ensure we strike the right balance between allowing consumer freedom and ensuring that there are protections in place to prevent gambling harm.

UPDATE: 

On the issue of customer affordability checks, we draw readers’ attention to:

  1. The Commission’s message to online gambling operators underlining its expectation that operators will act responsibly, particularly in relation to individual customer affordability checks and increased social responsibility interactions
  2. Our subsequent postings on: