UKGC: Finance checks will be ‘frictionless and light tough’ on operator payments journey

UK Gambling Commission (UKGC)

The UK Gambling Commission (UKGC) has mapped out plans for the introduction of finance risk checks, a major incoming requirement affecting British betting operators’ payments processes.

In a blog post this week, the UK’s gambling regulator outlined two-stage plans for implementation of ‘frictionless, light touch financial vulnerability checks’ which will be used to assess customers’ financial security when making gambling payments.

The measures are one of the core recommendations of the Gambling Act review’s April 2023 White Paper. Known as ‘affordability checks’ throughout the two-and-a-half year duration of the review, the measures have been subject to extensive debate.

The UKGC’s emphasis on frictionless checks in its latest update may come as a relief to much of the UK’s gambling sector. Throughout the consultation period, which followed the White Paper publication, operators often stressed the need for checks to be as frictionless and non-intrusive as possible.

“These checks will identify vulnerability such as where a customer is subject to bankruptcy orders or has a history of unpaid debts,” the UKGC explained.

“They will focus solely on publicly available data and, following feedback through the consultation, will not require gambling businesses to consider an individual’s personal details such as postcode or job title.

“To ease the introduction of these checks they will initially come into force at a higher threshold for a short period of time, before reverting to a lower threshold later in the year to smooth implementation for consumers. The details of this will be set out in the full response document.”

Despite revealing its plans to introduce thresholds, the UKGC has yet to confirm what figures these will be capped at. 

So far, all the industry has to go on is the initial proposals set out last April, which set a net loss of £125 within a month, or £500 within a year. Higher spending thresholds will stand at £1,000 a day and £2,000 a month, with stricter benchmarks for 18-24 year old customers.

To help keep the checks as frictionless as possible, the UKGC and DCMS plan to use third party Open Banking providers in the event customers have to provide evidence of financial stability. However, the regulator estimates that only 0.3% of online betting accounts will be affected by the checks.

What the industry can now expect, confirmed by the UKGC this week, is a trial period involving a ‘a selection of operators’ for a duration of between four and six months to give the regulator ‘sufficient information to inform future decision-making’.

A new requirement on data sharing will be set out in the Licence Conditions and Codes of Practice, although operators will not be expected to act on the data received in order to craft a ‘genuine pilot of how the data sharing works’.

Data will also inform the final thresholds which will define the final thresholds and definitions of loss or spend.  Operators can expect some clarity on how financial risk checks will inform payments politics in around six months time, according to the UKGC timeframe.

Lastly, the Commission explained five principles which will define its actions on finance risk checks over the coming months: 

  • Considering all issues from the pilot stage and refine the final requirements and models for data sharing to meet White Paper requirements.
  • Developing a system for conducting frictionless affordability checks for the ‘vast majority of customers’.
  • An overall customer interaction process that can help customers who are at risk of harm.
  • Ensuring checks are only one part of the controls and protections that are in place
  • That a pilot approach is separate to the formal evaluation of the financial risk check policy whilst understanding consumer perspectives and experiences.

“At the Commission we completely understand why there has been such interest in financial risk checks,” the Commission concluded.

“But it should be remembered that protecting people who are vulnerable, while still affording the freedom of others to gamble safely, is complex and there is no single solution.

“And that is why we will continue to take forward all of the Government’s White Paper proposals, which we believe can significantly support and protect consumers and improve overall standards in the industry.”

In a separate update, the DCMS also confirmed today that operators will have six months to implement a £2 stake limit on online slot games for under-24 year-olds and a £5 limit for those aged 25 and over.