Confusion likely to arise from the UKGC’s ‘Remote Customer Interaction requirements and guidance update’

Yesterday, 2 September 2022, the Gambling Commission published on its website a ‘New remote Customer Interaction requirements and guidance update’, that you can download below.

By way of background:

The Commission’s update states that the following LCCP Social Responsibility Code provision 3.4.3 requirements will not be brought into effect on 12 September:

2. Licensees must take into account the Commission’s guidance on customer interaction for remote licensees as published and revised from time to time (“the Guidance”).

3. Licensees must consider the factors that might make a customer more vulnerable to experiencing gambling harms and implement systems and processes to take appropriate and timely action where indicators of vulnerability are identified. Licensees must take account of the Commission’s approach to vulnerability as set out in the Commission’s Guidance.

10. Licensees must prevent marketing and the take up of new bonus offers where strong indicators of harm, as defined within the licensee’s processes, have been identified.

In addition, the Commission has stated that the reference to the guidance in paragraph 1 will also not be brought into effect this month, as a consequence of which it would appear that requirement 1 will, for the time being at least, omit the words shown crossed out below.

1. Licensees must implement effective customer interaction systems and processes in a way which minimises the risk of customers experiencing harms associated with gambling. These systems and processes must embed the three elements of customer interaction – identify, act and evaluate – and which reflect that customer interaction is an ongoing process as explained in the Commission’s guidance (see paragraph 2).

The remaining requirements of LCCP Social Responsibility Code provision 3.4.3 will come into force on 12 September 2022, leaving remote operators in what seems to us a potentially very confusing situation.

We say that because the consequence of its update is that, with effect from 12 September, requirements 1, 4-9 and 11-14 within LCCP Social Responsibility Code provision 3.4.3 will apply even though the obligation to take the guidance into account has been removed pending the outcome of a consultation on the guidance document that the Commission says: “is likely to be launched during late September and will last six weeks”, following which it will “publish the guidance on the requirements in December 2022, with it taking effect approximately 2 months after publication”. However, one can’t help but wonder how affected licence holders will ensure compliance with the new SR Code provisions unless they do take the guidance into account. We suspect that UKGC enforcement officers will take the same view.

In light of deletion of requirement 3, we also wonder whether the forthcoming consultation will also encompass the subject of ways to tackle three key financial risks for consumers: binge gambling, significant unaffordable losses over time, and risks for those who are financially vulnerable” that was first announced by the Commission’s Executive Director Tim Miller at the 4th Annual KnowNow Conference (chaired by David Clifton) a year ago and which the regulator’s CEO said in June 2022 would be launched “shortly”. An update from the Commission on that issue would be very welcome.

The reasons for these last-minute changes to the Customer Interaction Guidance are explained in the Commission’s update as follows:

New remote Customer Interaction requirements and guidance update

Remote gambling operators are advised to read this update on the introduction of new remote Customer Interaction requirements and guidance.

In April this year, the Gambling Commission published a set of new requirements, Social Responsibility Code Provision 3.4.3, which ensured that remote gambling operators had to do more to identify customers at risk of harm. Guidance to assist operators to comply with these requirements was published in June. These new requirements, and the accompanying guidance, were due to take effect on 12 September 2022.

The industry has requested an extension to the timeframe for implementing these new requirements. This is due to the technical challenges that some remote operators indicate they are facing in delivering full compliance by the 12 September 2022 deadline.

After careful consideration, we have decided that the majority of the new requirements will come into force as planned on 12 September. Remote gambling operators are already subject to a duty to conduct effective customer interaction, and the new requirements reflect the minimum steps that we consider are necessary to meet that duty.

However, we have also decided that the following requirements will not be brought into effect in September:

  • The requirement to take timely action where indicators of vulnerability are identified and to take account of the Commission’s approach to vulnerability as set out in the Commission’s guidance (paragraph 3)
  • The requirement to prevent marketing and the take-up of new bonus offers where there are strong indicators of harm (paragraph 10).

In light of this extension, the Commission considers that it would be beneficial to use the time now available to conduct further consultation on matters to be addressed in the guidance associated with SR Code 3.4.3, by way of a consultation on the guidance document itself. Therefore, the requirement to take into account the Commission’s guidance on customer interaction for remote operators (paragraph 2, and the reference to the guidance in paragraph 1) will also not be brought into effect in September.

The guidance is a living document which is intended to be amended over time. As part of the consultation, we will be particularly interested to hear about good practice in implementing the requirements, based on the lessons learned by operators during the period between April and September and to hear about any implications arising out of recent research, evidence and casework.

The consultation is likely to be launched during late September and will last six weeks. All views expressed in response to this six-week consultation will be carefully considered before a decision is taken on the contents of the guidance on the new requirements.

Subject to consultation, the Commission’s provisional intention is to publish that guidance on the new requirements in December 2022, with it taking effect approximately 2 months after publication. In the circumstances, we consider this will allow the industry a reasonable period to consider the guidance before it takes effect.

It is the Commission’s intention, subject to consultation, to bring the remaining requirements of SR Code 3.4.3 and the associated guidance into effect on 12 February 2023.

It therefore appears that, with effect from 12 September 2022, affected remote operating licence holders will be bound to fulfil the new customer interaction requirements that are not crossed out below:

Customer interaction 

All remote licences, except any remote lottery licence the holder of which does not provide facilities for participation in instant win or high frequency lotteries1, remote gaming machine technical, gambling software, host, ancillary remote bingo, ancillary remote casino, ancillary remote betting, remote betting intermediary (trading rooms only) and remote general betting limited licences.

    1. Licensees must implement effective customer interaction systems and processes in a way which minimises the risk of customers experiencing harms associated with gambling. These systems and processes must embed the three elements of customer interaction – identify, act and evaluate – and which reflect that customer interaction is an ongoing process as explained in the Commission’s guidance (see paragraph 2).
    2. Licensees must take into account the Commission’s guidance on customer interaction for remote operators as published and revised from time to time (‘the Guidance’). 
    3. Licensees must consider the factors that might make a customer more vulnerable to experiencing gambling harms and implement systems and processes to take appropriate and timely action where indicators of vulnerability are identified. Licensees must take account of the Commission’s approach to vulnerability as set out in the Commission’s Guidance.
    4. Licensees must have in place effective systems and processes to monitor customer activity to identify harm or potential harm associated with gambling, from the point when an account is opened. 
    5. Licensees must use a range of indicators relevant to their customer and the nature of the gambling facilities provided in order to identify harm or potential harm associated with gambling. These must include: 
      • customer spend
      • patterns of spend
      • time spent gambling
      • gambling behaviour indicators 
      • customer-led contact 
      • use of gambling management tools
      • account indicators.
    1. In accordance with SR Code Provision 1.1.2, licensees are responsible for ensuring compliance with the requirements. In particular, if the licensee contracts with third party business-to-business providers to offer any aspect of the licensee’s business related to the licensed activities, the licensee is responsible for ensuring that systems and processes are in place to monitor the activity on the account for each of the indicators in paragraph 5 (a-g) and in a timely way as set out in paragraphs 7 and 8.
    2. A licensee’s systems and processes for customer interaction must flag indicators of risk of harm in a timely manner for manual intervention, and feed into automated processes as required by paragraph 11. 
    3. Licensees must take appropriate action in a timely manner when they have identified the risk of harm. 
    4. Licensees must tailor the type of action they take based on the number and level of indicators of harm exhibited. This must include, but not be limited to, systems and processes which deliver:
      • tailored action at lower levels of indicators of harm which seeks to minimise future harm
      • increasing action where earlier stages have not had the impact required
      • strong or stronger action as the immediate next step in cases where that is appropriate, rather than increasing action gradually
      • reducing or preventing marketing or the take-up of new bonus offers where appropriate
      • ending the business relationship where necessary. 
    1. Licensees must prevent marketing and the take up of new bonus offers where strong indicators of harm, as defined within the licensee’s processes, have been identified.
    2. Licensees must ensure that strong indicators of harm, as defined within the licensee’s processes, are acted on in a timely manner by implementing automated processes. Where such automated processes are applied, the licensee must manually review their operation in each individual customer’s case and the licensee must allow the customer the opportunity to contest any automated decision which affects them.
    3. Licensees must implement processes to understand the impact of individual interactions and actions on a customer’s behaviour, the continued risk of harm and therefore whether and, if so, what further action is needed.  
    4. Licensees must take all reasonable steps to evaluate the effectiveness of their overall approach, for example by trialling and measuring impact, and be able to demonstrate to the Commission the outcomes of their evaluation.
    5. Licensees must take account of problem gambling rates for the relevant gambling activity as published by the Commission, in order to check whether the number of customer interactions is, at a minimum, in line with this level. For the avoidance of doubt, this provision is not intended to mandate the outcome of those customer interactions.