New customer interaction requirements for UK licensed remote gambling operators take effect in September 2022

As foreshadowed in the 12 April 2022 International Legislators’ Agenda speech by Sarah Gardner (the Deputy Chief Executive of the Gambling Commission), the regulator has at long last published its response to its Remote Customer Interaction Consultation, a copy of which you can download below.

That consultation (and accompanying Call for Evidence) commenced on 3 November 2020 and closed on 9 February 2021 after the original closure date of 12 January 2021 had been extended. That extension of time enabled the Commission to conduct an additional short survey seeking views on what is the right balance between consumer protections and consumer freedom and privacy. Overall, the regulator received approximately 13,000 responses to the consultation, call for evidence and short survey.

You can follow the below links to access each separate part of the Commission’s response document:

  1. Summary
  2. Next steps
  3. Introduction
  4. Proposal 1 – Overall requirements and process
  5. Proposal 2 – Identifying customers at risk of harm
  6. Proposal 3 – Requirement to act
  7. Proposal 4 – Evaluation of effectiveness
  8. The LCCP provision

New customer interaction requirements to apply to UK licensed remote gambling operators only

Revised customer interaction requirements (set out in a new LCCP Social Responsibility code provision 3.4.3) will come into effect on 12 September 2022 and will apply to remote operating licences granted by the UKGC, with the exception of:

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

As matters stand, the existing LCCP Social Responsibility code provision 3.4.1 requirements will continue to apply after that time to UK licensed land-based gambling operators.

The new requirements

Pursuant to what the Commission describes as ‘stronger and more prescriptive’ requirements, remote operating licence holders will be required to:

  1. monitor (from the point of account opening) a specific 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 which, as a minimum, must include:
    • customer spend
    • patterns of spend
    • time spent gambling
    • gambling behaviour indicators
    • customer-led contact
    • use of gambling management tools
    • account indicators
  2. flag indicators of harm and take action in a timely manner, dependent on the nature and severity of the indicator(s) in question, so that operators will tailor their processes in the following ways:
    • 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 bonus offers where appropriate
    • refusing service or ending the business relationship where necessary.
  3. implement automated processes for strong indicators of harm to ensure that they are are acted upon in a timely manner and follow this up by manually reviewing their operation in each individual customer’s case and allowing the customer the opportunity to contest any automated decision which affects them
  4. prevent marketing and the take-up of new bonuses where strong indicators of harm have been identified
  5. evaluate their customer interactions and “ensure they interact with consumers at least at the level of problem gambling for the relevant activity”
  6. evidence their customer interaction evaluation to the Gambling Commission during routine casework, thus markedly extending the existing LCCP evaluation requirement
  7. comply with the above requirements at all times, which the Commission says will apply “even where [operators] use a third-party provider to offer their customers gambling products/games” adding that “the operator must always understand a customer’s gambling position. It is not sufficient to only be aware when a customer returns from using gambling products/games with a third-party provider”.

Commenting on the new requirements, the Commission’s Chief Executive, Andrew Rhodes, has said:

Time and time again our enforcement cases show that some operators are still not doing enough to prevent gambling harm. These new rules, developed following an extensive consultation, make our expectations even more explicit. We expect operators to identify and tackle gambling harms with fast, proportionate and effective action and we will not hesitate to take tough action on operators who fail to do so.

New customer interaction guidance for remote operators

New guidance, of which all affected remote operators will be required to take account, will be issued in June of this year with the aim of helping them to understand and comply with the new requirements, in relation to which the regulator states: “we will engage with operators to enable the guidance to take account of queries we receive about the requirements following publication”. 

We imagine that many of those queries will focus on interpretation of the wording in item numbered 5 above (that we have shown in italics), although the Commission has provided an initial explanation of this within the main body of its response document, stating: 

Operators will be required to 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. As the purpose of customer interaction is to identify customers at risk of harm, it is manifestly a failure if the numbers of customers being identified is lower than the problem gambling rates for the products. We recognise that some guidance will be helpful for operators to understand how to apply this requirement where there is more than one product and this will be addressed further in the accompanying guidance for operators. However, the requirement is clear – this is an absolute minimum requirement”.

Immediate queries regarding the Commission’s precise expectations of operators in circumstances where customers use gambling products/games provided by a third party provider (as mentioned at item 7 above) may be answered by the following wording within the new LCCP Social Responsibility code provision 3.4.3:

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

Affordability and financial vulnerability: the next steps

Those anticipating that the Commission’s consultation response document might provide greater clarity in relation to the regulator’s expectations in relation to affordability checks will be disappointed, although the Commission confirms that it received “a wide range of views relating to assessments to identify unaffordable gambling”, adding that:

There were significant concerns about consumer privacy and freedom and calls for any such measures to therefore be targeted at the customers who are most at risk, and not general or what was often described as ‘leisure consumers’. Some stakeholders were strongly in favour of assessments to identify unaffordable gambling and called for the assessments to apply to all customers. We will explore these issues further in a future consultation which will consider requirements that will tackle three key and significant risks:

  • unaffordable binge gambling,
  • significant unaffordable losses over time, and
  • identifying customers who are in a particularly financially vulnerable situation.

The Commission goes on to say that it will:

  • “work closely with Government to ensure that the consultation proposals are set in the wider context of the Government’s Review of the Gambling Act 2005” and
  • continue its “broader programmes of work, focused on identifying customers at risk of harm …. including close engagement with the BGC and ICO on the ‘single customer view’ pilot”.

UKGC documents affected

As indicated above, both the new requirements and the accompanying guidance for remote operators will come into effect in September 2022 and the existing requirements and guidance will remain in place until that time. The Commission describes the affected documents as follows:

Licence Conditions and Codes of Practice:

  • new Social Responsibility Code 3.4.3 for remote operators in effect from 12 September 2022
  • existing Social Responsibility Code 3.4.1 will continue to apply to both remote and non-remote operators until 12 September 2022 and the existing guidance will also remain in place
  • Social Responsibility code 3.4.1 will apply to non-remote operators only from 12 September 2022.

Customer interaction

  • new Customer Interaction guidance for remote operators will be published by early June and will come into effect from 12 September 2022
  • earlier Customer Interaction guidance for remote operator will remain in place until 12 September 2022.

UPDATE: The Gambling Commission published its new Remote Customer Interaction Guidance on 20 June 2022, as reported by us here.