BGC launches interim code on risk checks in support of UKGC pilot on customer affordability

The Betting and Gaming Council (BGC) has established a new ‘voluntary code on customer checks’ to minimise frictions of financial checks and improve consistencies in know-your-customer (KYC) duties.

The voluntary code was designed in collaboration with the UK Gambling Commission (UKGC) to help raise standards and reduce the need for private financial document requests when verifying customers.

As cited by the BGC, the code was designed “in response to the ongoing debate around affordability, the BGC, Government, and GC are taking action now to find practical solutions for online betting and gaming, giving greater clarity to customers and horseracing, while enhancing standards.”

Launched as a voluntary measure for BGC members, the code specifies actions required when customers’ accounts exceed net deposits of £5,000 in a rolling month or £25,000 within a 12-month period.

Members applying the code “must undertake a risk assessment of that customer to: i) understand their financial situation (if not already known); and ii) assess whether that customer is displaying any indicators of harm.”

For higher wagering customers, who deposit over £25,000 annually, operators will need to request financial documents, detailed as an “enhanced consideration (which may be similar to an operator’s existing enhanced due diligence process).”

The BGC maintains its long-standing commitment to enhanced protection of customers’ accounts under the age of 24, with checks applied at a threshold of £2,500 deposits in a rolling month.

When applied, members must ensure that a one-on-one safer gambling interaction has taken place with a customer via live-chat or phone.  A review of customer’s current affordability must be undertaken, “including estimating their income or wealth” with supporting information on industry, job title and annual salary, or their savings/investments/ assets.

In addition operators can review open-source information on the customer, such as Companies House filings, public information on the customer’s specific salary or wealth/ assets, or previous winnings.

BGC Chairman, Michael Dugher, explained: “This Code is good progress toward solving an issue that has generated such heated public debate. It will significantly increase the consistency of safer gambling standards while removing intrusive document checks for many who are currently subject to detailed checks.

“I wish to see a new Code on Anti-Money Laundering Checks to complement this Code on Customer Checks to further raise standards on consistency and reduce the disproportionate need for document requests, rightly ensuring that betting with our members remains free from crime.”

Code supports UKGC pilot on financial vulnerability checks 

Stakeholders were reminded that the UKGC maintains its plans to adopt new financial vulnerability checks on customers as an approved measure of the Gambling Review’s White Paper.

At present, the Commission is undertaking a two-phased pilot test on proposed ‘light checks’ applied on customer net losses of £150 (without bonus funds) within a rolling 30-day period or £500 within a rolling 365-day period.

The pilot further includes a higher threshold of checks carried out on gambling accounts with losses greater than £1,000 within a rolling 24 hours or £2,000 within 90 days.

This morning the Commission provided an update on the consultation phase of financial vulnerability checks asserting that “pilot will commence at the end of August 2024, and should we then decide to fully implement the assessments, they would not be introduced in a live environment before 2025.”

Initiating the pilot in August, customer affordability checks will be applied on the initial threshold of £500, before being lowered to £150 a month from end of February 2025.

LCCP stakeholders were reminded that “the decision to introduce any final financial risk assessments will be subject to the findings from the pilot and data collection period. We intend to publish a final and full response to the consultation with our decision, which we expect will not be until at least 2025.” 

In light of changes, the BGC’s “Voluntary Code will sit alongside the new frictionless Financial Vulnerability Check, which is expected to be approved in the forthcoming Gambling Commission response to their ‘Remote gambling: financial vulnerability and financial risk’ consultation last year.” 

UKGC CEO Andrew Rhodes backs the measure: “This voluntary code will help ensure a consistent and transparent approach for consumers across participating operators where customer spend is the trigger for action. The thresholds in the code represent a set of minimum standards agreed upon by operators, including backstops where they will consider and engage with customers where necessary.

“We think this code will help address the varying approaches from operators to customer spend triggers today, whilst we conduct a pilot on the use of the frictionless financial risk assessments that the Government proposed in their White Paper.

“Of course, operators remain under the obligation to meet other requirements to support customers at risk of harm. All the normal monitoring and actions by operators where their customers may be showing signs of risk or harm remain the same and this can often be done in ways which do not involve document checks.”

BGC focused on improving all-round safety standards 

Though designed to improve KYC efficiencies, UK operators were advised to view the voluntary code as ‘enhanced protection’ for customers.

The code is applied during a transitional period for UK gambling, until the Government’s proposed frictionless financial risk assessments are fully developed and implemented.

The BGC maintains its proactive approach to include input from its members on key criteria to ensure the strictest compliance standards and to keep consumers away from harms and enhancing protections for young audiences.

DCMS Secretary Lucy Frazer said: “Over recent months we have been listening carefully to the views of industry, horse racing, campaigners, charities, and ordinary punters. We are committed to a balanced approach, which respects the personal freedom of the many millions of people who gamble without issue, while protecting people from the potentially destructive impact of gambling addiction.

“While the interim code is a significant step, we know there is more to do, and the Gambling Commission is set to publish its response to the consultation on financial risk checks.

“This response will set out a new system of light-touch, frictionless financial vulnerability checks and a pilot of the enhanced risk assessments, and we remain committed to only bringing in these assessments if we are assured they will be genuinely frictionless for the vast majority of punters.”