The UK Gambling Commission (UKGC) has provided clarity on how its pilot of finance risk checks, also known as affordability checks, will pan out.
Finance risk checks were proposed as one of the flagship measures of the Gambling Act review White Paper, published in April last year. The checks will set a series of thresholds for monthly deposits and losses for customers, varying per age groups.
These checks will significantly define the payments relationship between betting operators and customers over the coming years, and serve as a key KYC standard for holders of UK gaming licences.
UK gaming is still a long way off from fully implementing these checks, however. First will come the Commission-managed pilot, which the regular has reiterated will not be a ‘live test’, with no customers affected, and will last for between six and seven months.
A blog post written by the UKGC’s Director of Major Policy Projects and Evaluation, Helen Rhodes, explained how these checks will be tested. Firstly, the pilot will involve the UK’s largest remote gambling operators – it can be assumed that Entain, 888/William Hill, Flutter Entertainment and bet365 will be involved.
The pilot’s objective is to test whether high spending customers who are in significant financial difficulty can be identified. This includes people in high levels of debt or who have missed payments, for example.
“We are 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,” Rhodes explained.
“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.”
A familiar word was raised in Rhodes’ statement, ‘frictionless’. The UKGC and the industry have repeatedly stressed the need for checks to be as frictionless as possible. Operators in particular are concerned that if the checks interfere with the payments journey customers may be driven away from the regulated offering and towards illicit firms.
Of the four criteria the UKGC aims to test the checks against, two relate to the measures being frictionless – the first will look at what proportion of high spending accounts can gain a financial risk assessment from credit reference agencies. The second will assess how quickly these agencies can process an assessment and return a red, amber or green (RAG) rating to operators.
The latter two criteria are data relevance and accuracy, and implementation issues. Credit reference data will be assessed to see if it is meaningful for understanding individual financial risk, and data will be compared to information otherwise available to operators about customer financial vulnerability.
To assess implementation issues during the trial, the UKGC will look at how data can be presented to operators to understand the level of financial risk and vulnerabilities and examine how operators can build financial risk assessments into customer interaction processes.
Open Banking has been widely touted as playing a key role in how affordability checks will work. In the event customers have to share personal financial data with operators, something the UKGC stresses will not occur often, they will do so using a third party Open Banking provider.
It does not appear that the regular has factored Open Banking, or other financial or payments technologies, into the early stages of finance risk check development just yet.
