UK gambling Financial Risk Assessments are “self-harm on an immense scale,” stakeholders warn
Gaming and horseracing stakeholders have criticised the Gambling Commission’s decision to go ahead with FRAs.
UK.- The Gambling Commission yesterday confirmed its plans to move ahead with controversial Financial Risk Assessments (FRAs) for British gamblers. The checks will be introduced in a two-stage process at higher thresholds than initially proposed, with the timeline still to be confirmed.
The British regulator argues that the new financial risk information will help identify high spending customers in financial difficulties by supplementing the information gambling businesses already use to understand the risk of gambling harm and support vulnerable customers. It claims that the vast majority of customers will never require a Financial Risk Assessment and that those who do will have a frictionless, document-free assessment provided by credit reference agencies, with no impact on their credit score.
However, the gambling sector has been quick to respond to the news and it has deep concerns.
Grainne Hurst, Chief Executive of the Betting and Gaming Council, said operators were “deeply disappointed and frustrated” that the Gambling Commission had decided to press ahead despite significant concerns raised over the last 18 months.
“The fact that the Gambling Commission has delayed implementation, raised thresholds and abandoned its original timetable is a clear recognition that the concerns raised by the BGC and others were well founded. Unfortunately, the central issues around reliability, consumer impact and the practical operation of these checks remain unresolved.”
Ongoing concerns over the Gambling Commission’s FRA pilot
Hurst reiterated concerns that the organisation had raised following the pilot project last year. Although the Gambling Commission says the pilot suggested that 97 per cent of customers that cross the threshold “could be easily and frictionlessly assessed for financial difficulties”, the BGC says it has failed to demonstrate that the data underpinning these checks is accurate, reliable or consistent enough to support regulatory decisions.
“The pilot exposed inconsistencies in the information returned by credit reference agencies, with the same customer potentially receiving different outcomes depending on the provider,” Hurst argued. “Customers risk being wrongly identified as financially vulnerable based on a system that remains unproven. That is not a sound basis for regulatory intervention.
“The Commission has yet to publish a full evaluation of the pilot, so neither the industry nor the public has seen the evidence needed to justify introducing these checks. These checks cannot be described as genuinely frictionless if they produce unreliable outcomes, lead to unnecessary account restrictions or ultimately result in customers being asked to provide documents or open banking information.
She added: “While the Commission has announced implementation groups, it has given no indication that they will resolve the outstanding questions around reliability, consumer impact and how the system will operate in practice.
“We support evidence-led, proportionate regulation that protects vulnerable people while allowing the 22.5 million adults in Britain who bet each month to do so safely. But until the Commission can demonstrate these checks are accurate, consistent and genuinely frictionless, our fundamental concerns remain, including the risk of driving customers towards the growing illegal gambling market.”
A blow for the racing sector?
The horseracing sector has also been highly critical of the proposal for FRAs. It’s concerned that the requirements will disproportionately affect big-spending horse bettors at a time when the industry is already struggling with a downturn in revenue.
Brant Dunshea, Chief Executive of the British Horseracing Authority (BHA), warned that the checks “will have severe financial implications for British racing and the UK economy and subject racing bettors to unwarranted levels of intrusion.”
He echoed the BGC’s concerns about creating friction for customers.
“We understand these checks have been proven by the Gambling Commission’s own pilot to not be ‘fully frictionless’ as originally promised by successive Government ministers,” he said. “Rather than protecting consumers, these checks will have the opposite effect: driving more customers to the illegal market – which puts them at much greater risk of gambling-related harm – and starving the Treasury of much needed tax revenue.”
Dunshea also argued that the measure was too significant to be imposed by the Gambling Commission without direct scrutiny from lawmakers and expressed concern about the policy being signed off for implementation without stakeholders in racing and betting being able to see NatCen’s independent review of the pilot.
“Objective evidence from across the globe makes clear that this decision is one of self-harm on an immense scale that will have damaging economic and societal implications,” he said. “For this decision to be taken unilaterally by the Gambling Commission shows a clear abdication of duty by the Department for Culture, Media and Sport, which has failed to grip this process or properly consider the damaging consequences of the decision.
“A policy decision of this magnitude needed to receive parliamentary scrutiny, especially when other policies from the 2023 Gambling White Paper were passed via legislative routes. Sadly, this is the latest in a long chain of events that shows how little the DCMS has done for the country’s second-favourite sport. This includes its failure to reform the Horserace Betting Levy, despite clear evidence that demonstrates British racing needs a higher annual yield to remain internationally competitive.
How will British gambling Financial Risk Assessments work?
The first stage of implementation will see Financial Risk Assessments carried out by the largest operators for customers that make a £5,000 net deposit in a rolling 24-hour period. Once fully implemented, the threshold would be reduced to £1,000 in a rolling 24-hour period or £3,000 over a rolling 90-day period (or £750 and £2,000 for under 25s).
The Gambling Commission says FRAs will provide gambling businesses with access to limited credit reference data for the first time without affecting a customer’s credit rating. Customers who hold the highest spending accounts will have a frictionless assessment, and if that flags financial difficulties taking account of defaults, multiple/significant arrears, the business must consider whether it is right to offer some form of support.
The regulator says that less than 3 per cent of customer accounts would need an assessment once the measure is fully implemented. For these high-spending consumers who receive an assessment but who are not experiencing financial difficulties, the measure should reduce friction, it says. Where a high-spending customer is in financial difficulties, it says it will back operators to take “appropriate and proportionate action”
Operators will be expected to consider everything they know about the customer (including things that reduce risk) and use all options. These can include actions such as reducing marketing to vulnerable consumers or urging customers to set deposit limits.
It’s estimated that less than 0.1 per cent (1 in 1,000 accounts) that need an FRA would be unable to get one in a frictionless manner. This could be because customers had not had their identity verified properly by the operator or because they have recently changed their name or address and the update doesn’t yet appear on credit reference systems. For such customers, their identity would need to be verified, and this could mean assessing financial risk through other processes such as open banking or document checks.
