An update on affordability checks has been provided by the UK Gambling Commission as the regulator prepares to launch a six-month pilot for financial risk assessments.
The Commission announced on 1 May 2024 that it would look at launching a pilot of its frictionless ‘light touch’ financial risk assessments from 30 August, this upcoming Friday.
A four-stage plan was initiated by the UKGC back in May, hoping to adopt regulatory changes that will impact “remote game designs, terms and conditions on direct marketing, light-touch financial vulnerability checks, and tightening processes to support age verification checks in premises.”
Once launched on Friday, the pilot will run for six months to apply light-touch affordability checks with an initial threshold of customer deposits of £500 a month. Subsequently, the pilot aims to reduce the deposit threshold to £150 a month by 28 February 2025.
This figure will stand as a mandatory limit for affordability checks to be applied by online operators to protect players from significant financial losses.
Ahead of the pilot launch, the UKGC’s Helen Rhodes, Director of Major Policy Projects and Evaluations, reaffirmed that the pilot will aim to test the feasibility of introducing risk assessments to identify and support high-spending remote gambling customers in financial difficulties, with minimal impact on recreational customers.
The pilot is being undertaken with credit agencies and online gambling operators to examine the potential customer impacts of the deposit thresholds where “assessments are not being rolled out in a live environment.”
“We want to tackle cases where customers have been able to gamble large amounts without any checks or support, where it was later identified that this led to significant harm,” continued Rhodes.
“But we are proceeding cautiously to test whether and how financial risk assessments could be introduced in a way that supports high-spending customers in financial difficulties but also supports a frictionless customer journey for the vast majority of customers.”
To navigate these challenges, the pilot will prioritise identifying high-risk accounts, with the UKGC hoping to test “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 added: “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.”
“If financial risk assessments are introduced in the future, we are committed to longer-term evaluation”
Helen Rhodes, Director of Major Policy Projects and Evaluations at the UKGC
Key pillars within the pilot’s criteria include ‘Frictionless Part-1’, where affordability checks will be evaluated in terms of efficiency as the regulator aims to determine the number of players that will conduct a financial risk assessment without issue.
In the 2023 Gambling Act Review White Paper, the UKGC estimated the number of players set to undergo planned financial risk assessment without issues to be around 80%.
Rhodes’ statement read: “If the thresholds were set at those proposed in the consultation, this would mean that approximately 3% of accounts would be checked. We are testing whether 80 percent or more of that small proportion being checked would be frictionless.”
‘Frictionless Part-2’, the second criterion, will judge the speed and efficiency of credit reference agencies in processing assessments and returning results to operators.
Under the ‘data relevance and accuracy’ pillar, the UKGC will assess if credit references provide effective evidence of financial vulnerability compared to other data sources.
The evaluation will be completed by a final assessment on technical implementation, considering how affordability data can best be presented to operators and then implemented into customer interaction processes.
While the Commission suggested that the pilot will be accompanied by broader research into affordability checks with further data, evidence and stakeholder feedback, a successful pilot period could lead to the implementation of compulsory financial risk assessments.
Rhodes’ update concluded: “If financial risk assessments are introduced in the future, we are committed to longer-term evaluation, which we have discussed in our March blog on this topic.
“This would enable the Commission and the Department for Culture, Media and Sport jointly to consider if the policy is delivering the intended outcomes for consumers in a live environment.”