The Gambling Commission has previously warned operators that the treatment of VIP customers must change. Following the Commission's consultation in relation to high value customers (also known as VIPs), the Commission has now published new industry guidance as to how operators should treat VIPs.
The Commission states that its intention is for this guidance to “clean up the malpractice” it has seen within VIP schemes and is offered as a “last chance” for operators to prove that such schemes can be operated appropriately.
If operators depart from the guidance, they should be prepared to justify their alternative approach. If the minimum expectations cannot be met, the Commission states that VIP programmes should not be in place.
Who falls into the definition of ‘VIP’?
The Commission clarifies that the guidance is relevant to customers who provide sufficient ‘commercial value’ to operators, so that these customers attract enhanced customer service which is otherwise not offered to their wider customer base.
Managing VIP programmes
The guidance sets out specific requirements as to how VIP programmes should be managed and the expectations of the Commission.
One of the key new requirements is that a named senior executive, who holds a PML, must be accountable for the compliance of the VIP programme.
In addition, from 31 October 2020, before making a customer a VIP, operators must:
- Assess that the customer’s spending is affordable and sustainable;
- Assess whether there is any evidence of gambling related harm of if customers pose a heightened vulnerability risk; and
- Conduct enhanced due diligence and ensure all evidence is up to date.
The focus on sustainability as well as affordability shows that operators must place consideration as to how sustainable customers’ spending is, rather than simply their access to immediate funds.
Regarding customers who have previously self-excluded, the Commission considers that there are ‘limited circumstances’ in which it would be appropriate to upgrade them to VIP. Such an upgrade would require PML holder sign-off, as well as evidence of steps taken to mitigate the risk of harm.
The guidance emphasises that operators should carry out ongoing gambling harm checks, including personal (relating to physical or mental health), situational (such as financial difficulties or life changes) and behavioural checks (including a customer’s appetite for risk). These checks should be carried out, as a minimum, quarterly.
If a customer fails one of these checks, operators should suspend the account until the risk has been addressed and additional assurance sought, or the customer relationship discontinued. The Commission recognises that customers may withhold information, and operators can only be held accountable for information that they hold or could reasonably be expected to have obtained.
Managing relationships with VIPs
Operators should consider whether their staff are ‘equipped and motivated’ to manage VIP customers effectively. The Commission expects that operators take additional steps in this regard, including:
- Providing enhanced training specifically relating to VIP management from AML and SG perspectives.
- Rotating staff so that decision making remains objective.
- Not providing incentives or renumeration for staff based on VIP loss, spend or activity.
The Commission explains that teams responsible for customer checks and those responsible for managing VIPs should be appropriately separated. However, VIP, SG and AML teams must work collaboratively to allow for objective decision making.
Operators must ensure that they can demonstrate that rewards and bonuses are compliant with the LCCP. Similarly, tiered VIP systems should not incentivise VIPs to gamble excessively to retain their status, or to be upgraded to levels which are unsustainable.
The new guidance shows the Commission’s commitment to overhauling VIP practices. The guidance has been provided on a ‘last chance’ basis, with the Commission prepared to ban VIP schemes if improvements within operators are not seen.
The requirement for a PML holder to be accountable for the compliance of an operator’s VIP programme is significant, as it involves making individuals personally accountable. Operators must think carefully about the VIP programmes they currently have in place and consider if changes are required to ensure the Commission’s expectations, as set out in the guidance, are met.
The Commission’s statement detailing the new guidance is accessible here.