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The Gambling Commission’s director of major policy projects and evaluation has said initial findings around the impact of financial risk checks have been “very favourable,” but confusion remains around affordability checks.
Helen Rhodes said the recent findings from the ongoing pilot of financial risk assessments represent a “significant step forward in our work” during the opening talk at iGB L!VE in London on Wednesday (July 2).
“We have already implemented the light-touch financial vulnerability checks. We first did a £500 threshold of net deposits a day, moving down to £150 in February. These will be evaluated as we continue but, on top of this, we have completed a pilot of financial risk assessments, which has now moved into an analysis phase,” she said.
The ongoing analysis phase is intended to provide the regulator with more information on how operators can embed financial risk assessments into their customer interaction processes and help identify whether further improvements can be made to reduce any unnecessary inconsistency between reports from credit reference agencies.
Despite financial risk checks piquing the interest of a wide range of stakeholders, confusion remains around their definition.
Rhodes explained that the objective of financial risk assessments is to be a very targeted way of identifying customers who are high spending and those experiencing financial difficulties, so some support can be offered or provided to them.
“This is not the same as another way of saying affordability checks,” according to Rhodes, who clarified, “we don’t have specific regulatory requirements leading to affordability checks and we are not proposing any.”
“This is about identifying customers that are in current significant or imminent worsening financial difficulties by flagging customers who are, for example, in significant multiple arrears, defaults or bankruptcy,” she said.
However, when questioned on whether the commission would issue more guidance on affordability checks, Rhodes acknowledged many customers are still being told certain thresholds will trigger affordability checks and this can be “very confusing for consumers”.
“That doesn't mean that operators aren't looking at the issue of harm or the extent to which spending is connected with harm. We do have to give a slightly nuanced message about this. I think our next steps are to complete the analysis phase of the risk assessment pilot,” she revealed.
Once that is completed, the Gambling Commission would like to look at what penalties might be appropriate for operators if they were introduced.
While there isn't immediately any guidance imminent in relation to affordability checks, Rhodes believes there are opportunities in the future to bring further clarity around the term and how it differs from financial risk assessments, as well as share best practice with operators.
“Equally, if they (affordability checks) are not introduced following all of this work, we would need to give some additional information about what would happen for things like the interim voluntary code that operators have adopted, how we see our regulatory requirements adapting and taking change in light of whatever position we make,” she explained.
Additionally, when asked about collaboration with the Financial Conduct Authority (FCA), Rhodes stated they are “absolutely” working together on a range of areas, including financial risk.
“The Commission is keeping the FCA updated on our progress of the pilot and we are watching with interest how they are progressing their work in relation to the credit reference system, introducing new governance for the credit reference system and ways to improve consistency, for instance through the market recording of data in the system,” Rhodes added.
The Gambling Commission is also sharing its findings with the FCA around how open banking data can be used, and how the two authorities' regulations can “work in synergy”, to ensure any offer in the gambling sector is appropriate for consumers.
Illegal Gambling Enforcement
Several iGB delegates were keen to question the Gambling Commission on the action it is taking against illegal operators, as licensees deal with increased regulatory requirements.
Rhodes said currently there is a “very significant programme of work” being undertaken to combat illegal gambling and “policy is shifting”.
“The first is legislation, we hope this year to receive further powers from the government to tackle illegal gambling, by being able to get court orders to ban some forms of gambling,” she commented.
Another area the Gambling Commission is continuing to strengthen is its international engagement with other gambling regulators and other authorities, to share best practices and intelligence.
“When it comes to estimating the size of the illegal market,” Rhodes said, “we have been conducting some research in this area and it's worth continuing to stay in touch with our progress on that work this year as well.”
