The UK Gambling Commission (UKGC) has provided a technical update on its upcoming pilot for financial risk assessments for customers.
As announced on 1 May 2024, the Commission will begin its pilot of frictionless ‘light touch’ financial risk assessments from 30 August.
The pilot will initiate the Commission’s four-stage plan to adopt regulatory changes to “remote game designs, terms and conditions on direct marketing, light-touch financial vulnerability checks, and tightening processes to support age verification checks in premises.”
On 30 August, the Commission will begin its six-month pilot on light-touch affordability checks, applied to an initial threshold of customer deposits of £500 a month.
The pilot aims to reduce the deposit threshold to £150 a month by 28 February 2025 as the mandatory limit for affordability checks to be applied by online operators.
As noted, the pilot is being undertaken with credit agencies and online gambling operators to examine the potential customer impacts of the deposit thresholds where “assessments are not being rolled out in a live environment.”
An update on proceedings saw Helen Rhodes, Director of Major Policy Projects and Evaluations, underline the pilot’s objective to test the feasibility of introducing risk assessments to identify and support high-spending remote gambling customers in financial difficulties, without impacting the majority of recreational customers.
“We want to tackle cases where customers have been able to gamble large amounts without any checks or support, where it was later identified that this led to significant harm.”
“But we are proceeding cautiously to test whether and how financial risk assessments could be introduced in a way that supports high-spending customers in financial difficulties but also supports a frictionless customer journey for the vast majority of customers.”
As such, the initial stage of the pilot will prioritise identifying high-risk accounts, where the Commission is “testing how operators can be given limited information to understand how severe these financial difficulties might be, in order to take action to support the customer.”
“This would potentially allow operators in the future to look at other indicators of harm they have and tailor support to the customer, ranging from reducing marketing, encouraging the use of deposit limits, right up to ceasing the customer relationship. Where no financial difficulties are identified, the operator would not need to take any action.”
The pilot will be divided into key stages, during which it must gather data to identify a customer’s financial vulnerability, as the Commission seeks to establish criteria for imposing affordability checks.
Affordability checks will be evaluated on the first criterion of ‘Frictionless Part-1’ – to determine the level of high-spending accounts that will undergo a financial risk assessment without issues, which the UKGC estimates will be around 80%, as detailed in the 2023 Gambling Act Review White Paper.
“If the thresholds were set at those proposed in the consultation, this would mean that approximately 3 percent of accounts would be checked. We are testing whether 80 percent or more of that small proportion being checked would be frictionless.”
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‘Frictionless Part-2’, the second criterion, will judge the speed and efficiency of credit reference agencies in processing assessments and returning results to operators.
“Can credit reference agencies return the score or RAG rating to the gambling operator within minutes for matched customers? To what extent does latency affect the frictionless process?”
The pilot will then be examined for its ‘data relevance and accuracy’, to assess if credit references provide effective evidence of financial vulnerability compared to other data sources.
“How does this data compare to information that is otherwise available to operators about a customer’s individual financial vulnerability? Can Current Account Turnover (CATO) data add additional relevant insights on a customer’s individual financial risk?”
The evaluation will be completed by a final assessment on technical implementation, considering “how could the data be presented to operators to help understand the level of financial risk/vulnerabilities associated with individual customers?”
The Commission underscored that the pilot’s findings will be considered alongside broader data, evidence, and stakeholder feedback. If successful, the Gambling Commission may implement financial risk assessments, with ongoing evaluations to ensure the policy achieves the intended outcomes for consumers.
Rhodes’ update concluded: “If financial risk assessments are introduced in the future, we are committed to longer-term evaluation, which we have discussed in our March blog on this topic.”
“This would enable the Commission and the Department for Culture, Media and Sport (DCMS) jointly to consider if the policy is delivering the intended outcomes for consumers in a live environment.