British Gambling Commission defends Financial Risk Assessments amid crunch meeting
Only one in 1,000 accounts would be unable to receive an assessment in a frictionless way, the regulator says.
UK.- The British Gambling Commission has defended its proposed Financial Risk Assessments for gamblers after 19 MPs wrote an open letter calling for the measure to be paused. Despite not making a final decision at a key meeting on the matter today, it says there is a wide base of evidence supporting the checks, which it insists would affect only a small fraction of gamblers.
Although critics in the industry often refer to the checks as “affordability checks,” the regulator sees this as a misleading description of the proposed Finance Risk Assessments (FRAs). Speaking at the Clarion Payments Providers event this week, Ian Angus, the Commission’s Director of Policy, said it’s more than just a difference in wording.
“Financial Risk Assessments are not affordability checks by another name,” he said. “The checks we have been piloting will not even attempt to make an assessment of what each customer can afford to gamble.
“Nor do the proposed thresholds for an assessment limit or cap customer spend. FRAs were identified in the 2023 white paper as the best way to bring a frictionless and consistent method for gambling firms to check whether a consumer is in financial difficulties. This proposal was supported by the former government then and is also supported by the current government today. ”
The white paper proposal was for two types of checks: lighter Financial Vulnerability Checks, which are already in force, and more detailed Financial Risk Assessments. On the latter, a six‑month pilot was carried out last year.
Critics in the industry have argued that the pilot showed the checks to be less frictionless than intended and that different credit agencies produced different results. However, the Gambling Commission disagrees with that assessment.
On Financial Vulnerability Checks, it recently said that feedback on the initial stage of the measure, when the threshold was £500, showed most operators had seen no unintended consequences. The threshold has since been lowered to $150.
The Gambling Commission sticks by the government’s target that less than 3 per cent of active customer accounts should trigger any steps by an operator.
In his speech this week, Angus said: “Of these 3 per cent that would meet the requirements for an assessment, the pilot showed 97 per cent would successfully receive a frictionless assessment process. This is far better than what government estimated when they published the White Paper, which was 80 per cent.
“Only a very small proportion of active accounts would require an assessment and be unable to do so in a frictionless manner. The pilot shows it would actually be 0.1 per cent, again, better than the white paper estimated. That’s only one in 1,000 accounts that would be unable to receive an assessment in a frictionless way. And even that number could be reduced further, by operators meeting their existing obligations at the start of the consumer relationship to ensure that customers’ details are correct and their identity has been appropriately verified.”
How would Financial Risk Assessments be implemented?
It’s not clear when a decision on the future of Financial Risk Assessments will be made. It was widely expected that the Gambling Commission would make a decision at a meeting today, but it says it has not fully completed its assessment of the evidence from the pilot. With a decision expected at any moment, Angus promised that the regulator would work with the industry to ensure the smoothest possible implementation if the checks are introduced.
He said: “If the decision to implement is made, we will work closely with government, operators and credit reference agencies on the best way to implement them. That will include establishing an implementation group that will jointly develop the details of a sensible implementation plan and timetable.
“That in turn will help shape the guidance to operators to ensure that they take a proportionate approach to interacting with customers where financial risk is identified. And finally on this, if implemented, FRAs will allow us to give clear guidance to operators that they should not require consumers to provide documents to assess financial risk following a financial risk assessment.
“And to provide assurance to industry, our approach to compliance would also ensure that failing to request documents following a financial risk assessment would not be a reason for regulatory action. In fact, doing so would serve no legitimate regulatory purpose in such circumstances.”
Illegal gambling concerns
Industry representatives frequently warn that strict checks could push customers towards unregulated operators. This has been a recurring concern, with the recent rise in Remote Gaming Duty also cited as a potential boost for the black market.
The government has pledged an additional £26m to fund Gambling Commission’s enforcement efforts over the next three years. The regulator is also part of the government’s new Illegal Gambling Taskforce.
Angus welcomed these measures and said the regulator would examine “the drivers of consumer demand to the illegal market and how regulation can support innovation.” He also stressed the regulator’s openness to new ideas: “When the illegal market may be ramping up its attack on the licensed sector, we want to make clear our support for innovation when it’s in line with our licensing objectives.”
He concluded: “If you have ideas to improve the customer experience, make it more positive, make it more competitive, we want to hear them. The current statutory and public policy framework does place some limitations on what can be achieved but it doesn’t block innovation out of hand. So if you have ideas that could deliver a better consumer experience, do reach out to us.”
