From 31 October 2019 certain changes to the Licence Conditions and Codes of Practice (“LCCP”) will take effect following the Gambling Commission’s (the “Commission”) publication on 31 July 2019 of its consultation responses to changes to the LCCP (the “Report”). The outcome of the consultation process has resulted in the Commission implementing changes to the following key areas: (1) customer interaction requirements for gambling operators; (2) requirements for alternative dispute resolution (“ADR”) providers; and (3) operator contributions to research, prevention and treatment. The most onerous of these changes appear to relate to licensees’ obligations regarding customer interaction, in particular regarding the assessment of customer affordability.
The Commission has amended social responsibility code provision 3.4.1 (customer interaction) and associated ordinary code provision 3.4.2 so as to increase the requirements on licensees in their interaction with customers at risk of, or experiencing gambling related harm. These changes follow a commitment made by the Commission in both its Business Plan 2018-19 and in its Review of Online Gambling to consult on amending the LCCP social responsibility code provisions relating to customer interaction.
The new requirements are intended to focus on the outcomes of identifying and interacting with customers who may be at risk of, or experiencing harms associated with gambling, as well as on assessing the impact that a customer interaction has on an individual consumer and the effectiveness of businesses’ overall approach. Licensees are further expressly required to take into account the Commission’s guidance on customer interaction, which includes the newly published Formal Guidance on Customer Interaction (the “Customer Interaction Guidance”).
The Customer Interaction Guidance is structured around the three key outcomes operators are required to meet: to identify – interact – evaluate and is intended to support licensees in determining how they can meet LCCP outcomes. It builds on the customer interaction guidance note published by the Gambling Commission in February 2018. The most extensive updates from this previous customer interaction guidance relate to affordability and vulnerability in identifying customers experiencing or at risk of gambling harm, record keeping and the role of staff in interacting with and evaluating customer interactions.
The amendments are extensive and potentially very onerous on gambling operators. By way of example:
- Operators should consider various non-financial indicators in identifying customers experiencing or at risk of gambling harm. The Report criticises previous operator focus on financial triggers (such as deposit or loss thresholds) as a main or sole prompt for a customer interaction on the basis that levels set were inappropriately high, and that a focus on financial indicators alone fails to take into account a customer’s personal circumstances and particular vulnerabilities. Operators are accordingly expected as part of ‘know your customer’ to consider the factors that might make an individual more vulnerable to experiencing gambling related harm and ensuring staff initiate a customer interaction when there are potential signs of vulnerability.
- Operators should take into account the difference between ‘disposable income’ (net income minus taxes) versus ‘discretionary income’ (net income minus taxes and necessities but before deducting for other unavoidable costs such as mobile phones) in assessing customer gambling affordability. The Commission expects operators to consider affordability by reference to open source data (including disposable income data) to drive social responsibility triggers intended to identify gambling-related harm. The disposable income data in the Commission’s Raising Standards for Consumers Enforcement Report 2018/19 (“Enforcement Report 2018/19”) suggests that the majority of the population have disposable income of less than £500 per month, with the discretionary income figure accordingly less than this. The implication is that in assessing affordability and the appropriateness of initiating customer interaction, an operator may be expected to take action in respect of a customer spending far less than £500 per month.
- Operators should tailor their interaction with customers based on the group of customers, the message being delivered and the extent of the potential harm. The Customer Interaction Guidance provides various additional examples of how an operator could tailor their customer interaction.
- As part of interacting with customers, operators should keep detailed records capable of demonstrating when and why a particular customer interaction has occurred and which are capable of assisting with ongoing monitoring. Operators are expected to keep records of all customer interactions, including where an interaction did not take place, the reasons for this, and how it was followed up. As part of evaluating the impact and effectiveness of a customer interaction, a customer interaction (incident) log should include, at a minimum: the identity or other identifier of the customer involved, the behaviour or activity that prompted the interaction, the advice or support given, and the outcome of the interaction.
- Operators are expected to train and support their staff in order to assist them in carrying out effective customer interactions. This includes providing staff with training on such things as the type of help or support to offer customers, what to do if a customer becomes distressed and how to recognise when follow-up activity to an interaction is required. Operators are also expected to ensure staff compliance with the customer interaction record-keeping requirements and to ensure that staff use these records to aid decision-making and for evaluation purposes.
These changes to the LCCP will apply to all licences, except non-remote lottery, gaming machine technical, gambling software and host licences and will come into force on 31 October 2019.
Additional standards for ADR providers
The Commission has amended social responsibility code provision 6.1.1 (complaints and disputes) so as to require licensees to use only ADR providers who meet the Commission’s ‘additional standards’(as published in October 2018). The change is intended to provide consumers with a consistent service from any ADR provider in the sector and is supplemental to the requirements of the ADR Regulations. ADR providers who do not meet the Commission’s ‘additional standards’ will be precluded from being nominated and used by gambling businesses.
Broadly, the additional requirements on ADR providers address decision remit; transparency and independence; consistency and quality; customer service; and sharing complaints information and data more regularly. The additional requirements also seek to standardise the process by which providers may award compensation to customers, but are not intended to increase the frequency of such awards.
The Report notes that these changes to the LCCP are not intended to impose any new obligation on licensees to ensure that their nominated ADR provider is meeting the additional standards. Instead, licensees will fulfil their obligations under the LCCP simply by checking that their ADR provider is on the list of approved providers, which the Commission intends to publish on their website.
These change to the LCCP will apply to all licences (including ancillary remote licences) except gaming machine technical and gambling software licences and will come into force on 31 October 2019.
Research, prevention and treatment contributions
The Commission has amended social responsibility code provision 3.1.1 (combating problem gambling) so as to require that any annual financial contributions made by licensees (also known as “RET” contributions or funds) for research, prevention and treatment be made to organisations which are approved by the Commission. The systems remains voluntary and the Report confirms that there will be no mandatory minimum RET contribution imposed on operators.
This change to the LCCP will apply to all licences, and will come into force on 1 January 2020.
The Commissions’ Executive Director, Paul Hope, commented in respect of the Report:
“These changes have been designed to make gambling fairer and safer for consumers and we expect gambling firms to meet their responsibilities in these areas.”
It will be important for operators to take the time to consider the contents of the Report and also the Customer Interaction Guidance in adjusting and updating their policies and procedures as necessary. The recommendations relating to operators’ assessment of affordability and customer personal circumstances in identifying customers at risk of gambling harms are particularly onerous and are likely to reduce operator revenue. The additional standards imposed on ADR providers are also likely to result in increased costs which may be passed onto operators in turn.
The Report follows a number of recent actions taken by the Commission in seeking to ensure fairer and safer gambling. These include the Commission’s recently launched National Strategy to reduce gambling harms and an overview of the enforcement action and future lessons for operators set out in the Commission’s Enforcement Report 2018/19 (an overview of which is available in our recent LawNow).