UK to introduce financial risk assessments for online gamblers
The UK Gambling Commission (UKGC) has announced that it will be introducing Financial Risk Assessments (FRAs) in stages and with the aim of identifying customers in financial difficulties, as well as streamlining and improving operator processes.
Gambling financial risk assessments to be introduced in the UK
In its announcement of this development, the UKGC stated that the introduction of FRAs is intended to represent “a streamlined approach to identifying and supporting high-spending customers in financial difficulties”.
It continued that there is evidence that “some high-spending gambling customers are experiencing current financial difficulties but are not being identified or supported by gambling businesses”.
These high-spending gambling customers, the UKGC commented, “are between two and four times more likely to have a debt management plan and between two and five times more likely to have a default in the previous twelve months than consumers in the wider population”.
With that in mind, the UKGC stated that, “following extensive consultation” and “engagement with stakeholders and piloting,” it has decided on a staged approach to the implementation of FRAs.
It said that FRAs will provide operators with “a new, more effective and proportionate way of identifying customers in significant financial difficulty, while reducing reliance on document checks that some operators currently use to seek to identify financial risk and that are unpopular with many consumers”.
Having said that, the UKGC commented that “the vast majority of customer” will never require such an assessment but added that “those who do will have a frictionless, document-free assessment provided by Credit Reference Agencies, with no impact on their credit score”.
First stage of financial risk assessments implementation
Detailing how the first stage of implementation is set to be conducted, the UGC stated that this stage will see FRAs carried out by the largest operators, “where there is high spend of multiple thousands of pounds over a 24-hour period”.
It commented that, “for most,” this means £5,000 (€5,845) net deposit throughout a rolling 24-hour period, “which is a very unusually high spend pattern that less than 0.5 per cent of customers exceed”.
The UKGC stated that it will continue working with gambling businesses, credit reference agencies, and other stakeholders in order to refine the assessments and support proportionate implementation.
“Importantly, the Commission has also confirmed that, during the early stages of implementation, no enforcement action will be taken on a failure to act following a Financial Risk Assessment, though operators are still subject to all other existing licence requirements which must be met, and in relation to which action may be taken,” it stated.
The UKGC said that once FRAs have been fully implemented, they will be applied to customers aged 25 years or older with net deposits exceeding £1,000 (€1,169) in a rolling 24-hour period or £3,000 (€3,507) over a rolling 90-day period. For customers younger than 25, the thresholds are reduced to £750 (€877) in a rolling 24-hour period and £2,000 (€2,238) in a rolling 90-day period.
Sarah Gardner, Acting Chief Executive of the UKGC, said that the Commission is confident that its approach will enable support for high-spending customers in financial difficulties, while also reducing friction for customers not in such difficulties by removing the need for document checks.
Gambling Minister Baroness Twycross said that she welcomes the UKGC’s decision to implement FRAs “in a careful, phased way”. She remarked that “the right balance must be struck so that assessments protect those in financial difficulties” and also “do not create unnecessary burdens for the industry or consumers”.
Black market concerns
When previously discussing the potential introduction of financial risk checks, industry stakeholders, including the UK Betting and Gaming Council (BGC), have spoken about concerns that such measures could inadvertently push consumers towards the illegal black market, where no protections are offered and regulations are not followed.
Regarding such concerns, the UKGC said that its proposed approach, “which reduces document checks for socially responsible purposes, will decrease the risk of these consumers going to the illegal market because they do not want to provide financial documents”.
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