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Reminder: Changes to the protection of consumer funds rating system

United KingdomScotland
20/05/2019
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As we first reported in March, following an informal consultation the Gambling Commission ("Commission") has updated the information that gambling operators must set out under Licence Condition 4.2.1. The required information must set out arrangements for protecting consumer funds in the event of insolvency, including the level of protection and the method by which this is achieved.

The changes are set out below:

Former customer funds ratings system

New customer funds insolvency ratings system

Not protected (No segregation – permitted for non-remote and ancillary remote operators only)

Not protected (No segregation – permitted for non-remote and ancillary remote operators only)

Basic (Segregation of funds – minimum requirement for all remote operators who hold customer funds)

Not protected (Segregation of funds – minimum requirement for all remote operators who hold customer funds)

Medium (Quistclose or equivalent)

Medium protection (Quistclose or equivalent)

High (Independent trust account)

High protection (Independent trust account)

The Commission believes the new amendments will clarify the level of protection afforded for customer funds in the event of insolvency and will reduce the likelihood of consumers being misled. Operators are required to communicate any changes to new customers in accordance with Licence Condition 4.2.1. Where an operator previously described the level of protection as "basic", they must inform customers of the new "not protected" rating when a customer makes a subsequent deposit after the change is made.

These changes came into effect on 29 April 2019. However, whilst the informal consultation proposed to allow operators up to four weeks to implement any changes, the Commission agreed to extend this to eight weeks as some responses stated the initial time period would be challenging due to potential circumstances which would be out of operators’ control (e.g. the updating of apps).

Gambling operators now have little over a month to put these measures into place and so should aim to action these changes as soon as possible if they have not done so already.

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