The UK Gambling Commission has recently announced forthcoming changes to its Licence Conditions and Codes of Practice (“LCCP”) intended to:
- raise standards for alternative dispute resolution – coming into force on 31 October 2019,
- strengthen requirements on how licensees identify and interact with customers who may be at risk of or experiencing gambling harms – also coming into force on 31 October 2019 – and
- improve the transparency of funding for problem gambling research, prevention and treatment (by setting a list of bodies to which businesses can contribute) – coming into force on 1 January 2020.
Of most immediate bearing is the second change mentioned above, as it fundamentally alters the manner in which gambling operators must in future conduct customer interactions.
This stems from the Gambling Commission’s perception – fuelled by a series of well-publicised customer interaction failings over the last 5 years – that gambling operators do not properly identify activity indicating that a customer is experiencing harms associated with gambling and therefore fail to interact promptly or effectively when this occurs.
A combination of the recent £5.9 million penalties incurred by Ladbrokes Coral Group for historic failings in the above respect and this week’s BBC Panorama “Addicted to Gambling” TV programme have provided clear evidence to substantiate that perception.
The forthcoming customer interaction changes have been designed to address such failings and to ensure that, in future, operators monitor activity when an interaction has taken place with a customer in order to understand the impact of the interaction and evaluate the effectiveness of their policies and procedures.
The Gambling Commission’s Customer Interaction Guidance
To assist in this process, the Gambling Commission has published guidance for both remote and non-remote gambling operators that its licence-holders (with the exception of holders of non-remote lottery, gaming machine technical, gambling software and host licences) will be obliged to take into account when the replacement LCCP Social Responsibility Code provision 3.4.1 comes into force on 31 October, providing as follows:
- Licensees must interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling. This must include:
- identifying customers who may be at risk of or experiencing harms associated with gambling
- interacting with customers who may be at risk of or experiencing harms associated with gambling
- understanding the impact of the interaction on the customer, and the effectiveness of the Licensee’s actions and
- Licensees must take into account the Commission’s guidance on customer interaction.
At the same time, the existing LCCP ordinary code provision 3.4.2 will disappear, on the basis that its existing provisions will be covered by matters contained within the guidance.
In order to allow sufficient time to make all required changes to, and properly train staff on, their customer interaction policies, procedures and practices, all affected operators will need to read and absorb the applicable guidance immediately so that they are in a position to implement all required changes by 31 October. If they fail to do so, they are unlikely to achieve the three key outcomes required by the Commission, namely to “identify”, “interact” and “evaluate” along the lines set out at (a), (b) and (c) in the new SR code provision set out above. As a result, they may well find themselves on the receiving end of enforcement action similar to that which has all too regularly hit the headlines in recent times.
Operators should also take particular note of what is said in the guidance with regard to gambling operators having not systematically considered customer affordability when developing their customer interaction policies.
The Commission states that “many have used deposit or loss thresholds as a main or sole prompt for a customer interaction, but these have often been set at levels that were inappropriately high, in comparison to the average amount of money that the majority of people have available to spend on leisure activities. This has led to a number of examples of customers spending more than they could afford, and this not being identified sufficiently early, as seen in much of the Commission’s compliance and enforcement casework since 2017”.
The guidance makes clear that operators must set their threshold levels appropriately, assisted by means of open-source data that can help them assess affordability for their customer base and improve their risk assessment for customer interactions. It adds that “thresholds should be realistic, based on average available income for your customers. This should include the Office of National Statistics publications on levels of household income”.
The guidance distinguishes between ‘disposable income’ and ‘discretionary income’, i.e. the amount left after living costs are taken into account, but it does still include many other unavoidable costs, concluding that “most people would consider it harmful if they were spending a significant amount of their discretionary income on gambling”.
What the Commission expects operators to do…
I am setting out below extracts from the Gambling Commission’s guidance (accessible on its website or via the links above) that will hopefully assist operators to better understand the Commission’s expectations.
I have indicated in some aspects below where the guidance for the remote sector differs from that for the non-remote sector and vice-versa. Where the words “remote” or “non-remote” do not appear in brackets below, the Commission’s stated expectation extends to both remote and non-remote operators.
- Use a range of indicators relevant to your business that you can observe and monitor. Do not rely on financial indicators alone. Where trigger points or thresholds are used, they should be realistic, and remember that not every customer who is experiencing or at risk of harm will trigger every indicator.
- Monitor customer activity and behaviour so that you are able to interact early and quickly. Invest in appropriate systems and staff to manage your customer interaction process effectively.
- Monitor customer accounts from the time they are opened (remote).
- Make sure your process keeps pace with any increase in demand:
- through growth, mergers or other internal changes (remote)
- through general growth or seasonal, promotional or other variations which might mean you are busier than usual (non-remote).
- Train your staff to know their roles and responsibilities, and ensure they are supported and given the tools and skills they need to be able to act promptly when they spot or are alerted to indicators of harm:
- this includes your VIP teams (remote)
- including those among your VIP and monitored customers (non-remote).
- Aim to minimise the risk of harm for customers, whatever time of day they play, as well as for new customers (remote).
- Ensure that your customers are not put at any greater risk of harm as a result of your premises being busier or quieter than usual. You need to protect your customers regardless of these factors (non-remote).
- Think about the protection of new customers – you know less about them, so you may not know what their regular gambling pattern looks like. This means that alternative measures must be applied (non-remote).
- Take safer gambling seriously for all customers, including VIPs:
- and not let commercial considerations override customer protection; this means your VIP customers get the same level of protection as your other customers (remote)
- and not let commercial considerations override customer protection (non-remote).
- Make meaningful records of all interactions with customers. Make these records available to staff and use them to aid decision-making. This should also take place in circumstances where an interaction has been ruled out e.g. because the customer is displaying signs of agitation.
- Even if you think your sector is “lower risk”, all forms of gambling present risks and you should understand the prevalence of gambling harms for the type of gambling products you offer and implement appropriate processes.
- Actively promote:
- and encourage the use of gambling management tools to all customers and in particular where you have carried out a customer interaction. Research (Behavioural Insights Team, 2018) has shown that reducing friction in applying a gambling management tool leads to increased numbers taking it up (remote).
- tools such as voluntary machine alerts and ensure all your customers have access to information about safer gambling and the support available (non-remote).
- We expect you to be curious, and if you spot behaviour that could indicate harm, to act on it.
- Ensure your staff have access to the information and support they need, such as customer interaction records, so that they are able to make decisions about how to interact and can do so discreetly (non-remote).
- Make all reasonable efforts to make contact and interact with a customer and find out what impact your interaction had (remote).
- You should choose the type of interaction based on the extent of the potential harm – from automated responses to human contact – and adapt your messaging to try to get the best outcome. You should trial and evaluate different approaches to achieve this. Importantly this may include refusing service or ending the business relationship (remote).
- Interact in a way that is appropriate to the severity of the potential harm. You should trial and evaluate different approaches to achieve this. Importantly, this may include refusing service or ending the business relationship (non-remote).
- Think about what information you should give the customer to help them understand why you are interacting with them, such as describing the type of behaviour they display or practical help or support where appropriate.
- Understand the impact of individual interactions on a consumer’s behaviour and whether/ what further action is needed.
- Evaluate the effectiveness of your approach by trialling and measuring impact.
- Embed lessons learned and best practice across the business and collaborate to share across the industry.
What the Commission recommends operators should be asking themselves
The guidance also sets out the following questions that the Commission believes operators should be asking themselves. Where the words “remote” or “non-remote” do not appear in brackets below, the question posed extends to both remote and non-remote operators.
- Are you curious about your customers?
- Are your indicators relevant to your products and customers? (remote)
- Are your indicators relevant to your gambling facilities and customers? (non-remote)
- Do you rely too much on financial indicators like deposit levels or losses? (remote)
- How do you decide the right level of your thresholds? (non-remote)
- Do you consider all types of vulnerability? (remote)
- How do you decide the right level of your thresholds? Do you set your thresholds based on the staff you have to manage the workload, or do you think about what is right for your customers? (remote)
- Do you take into account all relevant information, and act quickly? (remote)
- Do all appropriate staff have access to customer interaction records?
- How could you assess the risks around new customers? What can you find out about your customers? What protections could you put in place until you know enough about your customers? (remote)
- How do you assess the risks posed by new and unfamiliar customers? (non-remote)
- Can your monitoring process keep up with demand? (remote)
- Do you offer the same level of protection for all your customers, no matter how long they have been a customer, what time of day they play, or whether they are VIPs? (remote)
- Do you track customers across your different platforms and do enough to spot multiple customer accounts? (remote)
- Is staff training on customer interaction meaningful and engaging?
- Do you take into account all relevant information and act quickly? (non-remote)
- Does the structure and layout of your premises help or hinder identifying customers you need to interact with? (non-remote)
- Do you have any blind spots which mean that you are unable to monitor all customer activity? (non-remote)
- Is spend monitored across different products for individual customers? (non-remote)
- Do you offer the same level of protection for all your customers, no matter how long they have been a customer, or whether they are VIPs? (non-remote)
- Where concerns arise, are you able to intervene early and engage with a customer? (remote)
- Where concerns arise, are you able to intervene early and engage with a customer at the right time? (non-remote)
- How do you decide the best way of interacting with a customer? Do you use different methods for different groups of customers? (remote)
- Do you tailor your method and message depending on the extent of the harm? (remote)
- Do you know if the customer received and acted on the information you gave? (remote)
- How do you ensure your staff are prepared and able to carry out interactions? (non-remote)
- Are your staff able to carry out customer interactions discreetly? (non-remote)
- Are your staff aware of and trained to carry out different levels of interaction? (non-remote)
- Have you allocated the right level and kind of resources to be able to interact with customers effectively when you have concerns?
- Do you know how many of your customers may be experiencing some level of harm associated with gambling?
- How do you know you are delivering positive outcomes for your customers?
- How could you improve on your policy and procedures? How do you plan to make improvements over time?
- How could you share your good practice with the industry?
Operators face a daunting task ahead. The task involved in achieving the Gambling Commission’s customer interaction expectations should not be under-estimated. Senior management must take ownership of that task if they want to avoid their company hitting the headlines for all the wrong reasons in future.
I would urge them not to ignore the summary of research and information at the end of the Commission’s guidance and I would also recommend that close regard is paid to the “Safer gambling healthcheck” and “Affordability and customer protection” sections included within the Commission’s “Raising Standards for Consumers Enforcement Report”, published in June 2019.
David Clifton – Director – Clifton Davies Consultancy Limited