Affordability checks have long been a part of the discussion surrounding the Gambling Act review and, as of this month, the government has clarified that the UK will soon be introducing ‘finance risk checks’ for online gambling.
Sonny Cott, Commercial Director at beBettor, looks at the proposed financial risk checks in the recently published UK Gambling White Paper before outlining what completely frictionless customer checks look like.
As the dust settles, post the announcement of the long awaited Gambling White Paper, published by The Department for Culture, Media & Sport (DCMS), there has been a lot of focus on some of the key proposals put forward by the Government.
One of the key areas of reform are the proposals for Financial Risk and Affordability Checks in a two stage financial risk framework.
The first stage is for operators to conduct a financial vulnerability check upon £125 net loss within a rolling month or £500 net loss within a rolling year.
The second stage is for operators to conduct a more detailed enhanced spending check upon £1,000 net loss within a rolling 24-hour period or £2,000 net loss within a rolling 90-day period. These thresholds are to be halved for customers aged 18-24.
The Government has expressed the desire for both of these checks, in the first instance, to be frictionless.
The characteristics of frictionless affordability checks
For financial risk checks to be completely frictionless, they need to be conducted seamlessly in the background, without disrupting the user experience. However, the White Paper is lacking in any detail about what this will mean in practice and we will have to await the promised Gambling Commission consultation paper to get a fuller understanding of their thinking. In the meantime, we would suggest that the following three criteria must be met in order for such checks to be truly classified as completely frictionless.
- Consent Free
For a financial vulnerability or affordability check to be completely frictionless, customer consent should already have been granted in order to comply with the operator’s terms and conditions. If the check requires additional consent, it does not make it completely frictionless.
- Credit Check Free
Whilst hard credit checks can affect customer credit scores, even soft searches can leave marks on customer credit files. In the context of gambling, both of these results would be of concern to the majority of customers. This can also result in friction between the operator and customer.
- Financial Information Free
Checks that require the customer to share or provide access to sensitive financial information adds friction to the customer journey. This is sometimes necessary once a customer reaches a certain level of risk and the need for a source of funds or source of wealth is necessary. However checks that require the customer to provide financial information (physically or digitally) are not characteristics of frictionless checks and, whether they are supplied directly to operators or to third parties who hold and process the information, all of the evidence to date indicates that customers view such an approach as an unnecessary and disproportionate invasion of their privacy.
beBettor’s Frictionless Approach
beBettor has been working with leading UK gambling operators since 2019 with an affordability solution that is truly frictionless for operators and privacy centric for the customer.
beBettor provides a two-stage affordability solution for UK online gambling operators. The first is a financial vulnerability check, that only flags at-risk customers and the second is an income check that provides a detailed estimate of an individual’s discretionary income.
Both beBettor checks are in line with the proposals put forward by the Government and both meet the criteria needed to be completely frictionless (consent free, credit check free, financial information free). When layered, beBettor’s 2 financial checks, enable operators to conduct risk-appropriate affordability checks seamlessly in the background, prior to the need for more intrusive source of funds / source of wealth checks that fewer customers require.
More and more operators are opting for a truly frictionless affordability solution which enables earlier stage financial risk assessments that can be conducted seamlessly in the background at no detriment to the customer experience.
Next steps for financial risk checks
As the White Paper has now been published, the Gambling Commission (UKGC) will hold further consultations on the proposed financial vulnerability checks and enhanced checks.
These consultations will look to inform any final regulatory requirements for operators regarding financial vulnerability checks and affordability checks. They are expected to be released during 2023, giving all interested parties the opportunity to provide evidence and views on these issues.