Regulatory update: Gambling commission - proposed changes to licence conditions

Posted: 7th March 2018

Background

On the 25th January 2018, the Gambling Commission launched a consultation on the proposed changes to its Licence Conditions and Codes of Practice (LCCP). The Gambling Commission exists to safeguard consumers and the wider public by ensuring that gambling is fair and safe. The proposals in the consultation relate to some of the work the Gambling Commission is taking forward from its Strategy 2018 - 2021:  

• Protecting the interests of consumers
• Raising the standards in the gambling market
• Improving the way the Gambling Commission regulates the gambling industry

The consultation and proposed changes are intended to support the Commission’s wider three-year strategy, the paper is one part of a work programme which will require the involvement of regulators, industry and partners to work together to deliver change.

The Gambling Commission has a duty to permit gambling as long as it is reasonably consistent with the three licensing objectives:

• Preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime
• Ensuring that gambling is conducted in a fair and open way
• Protecting children and other vulnerable persons from being harmed or exploited by gambling

The Gambling Commission wants to be confident that gambling operators are being fair and open with customers. The consultation proposes changes to marketing and advertising, unfair terms, and complaints and disputes.

Key Points

The proposed changes to the LCCP are in three main areas. These proposals flow from the second licencing objective: to keep gambling fair.

Marketing and advertising

The Gambling Commission wants to elevate compliance with the UK Advertising Codes from an ordinary code (OC) provision to a new social responsibility (SR) code provision. This would ultimately mean that any licensee that breaches the codes in future could be subject to the full range of the Commission’s regulatory powers.

The Gambling Commission, along with partners such as the Advertising Standards Authority (ASA) and the Committees of Advertising Practice and Broadcasting Committees of Advertising Practice (CAP and BCAP) will seek to ensure that marketing communications for gambling are fair, don’t mislead and aren’t targeted at vulnerable people.

The proposed changes to licence conditions are:

• Ensure that licensees adhere to the UK Advertising Codes
• Make the current requirements about misleading advertising clearer to licensees
• A new requirement to prevent consumers from receiving ‘spam’ marketing by email or SMS
• Licensees are responsible for the actions of any third-party organisations that they use, if the third party does not adhere to any of these requirements

Unfair terms

The Gambling Commission has been working closely with the Competition and Markets Authority (CMA) to review whether terms, conditions and practices that licensees use are fair and transparent, especially around bonus offers. This is in line with the UK consumer protection legislation, which licensees must obey.

The proposed changes to the licence conditions make clear to licensees that they must obey relevant consumer protection legislation at all stages of dealing with consumers, and not only when designing marketing materials. This has arisen from customer complaints and concerns raised with licensees, Alternate Dispute Resolution (ADR) providers and the Commission, and frequently relate to terms customers consider to be unfair. The evidence has indicated that unfair terms and practices are an industry-wide issue, and the Commission continues to be concerned that licensees may not be treating consumers fairly.

They are also consulting on rule changes to make it simpler for the Gambling Commission to take action if they think a licensee is not following relevant rules.

Complaints and disputes

The Gambling Commission proposes to introduce advice to licensees on handling complaints. They expect licensees to take this advice into account when they handle complaints. The advice covers areas such as:

• Defining complaints and disputes, and clarifying, where possible, the disputes an ADR provider can consider
• Complaints procedure requirements
• Receiving complaints from different sources
• Time limits for complaints handling and escalation
• Requirements for escalating disputes to ADR providers
• Standards for providing information to customers
• Information required by the Commission

The Gambling Commission regulation is focused on outcomes, linking directly to the second licensing objective (fair and open), they expect licensees to handle complaints in a fair, open, timely and transparent manner.

Therefore, the change to SR code provision (complaints and disputes) reflects this position. The consultation appreciates firms may have different approaches to achieve the desired outcome, however the proposed approach allows licensees to design processes that work best in specific circumstances.

The consultation highlights that, from research conducted, the majority of complaints policies were contained in lengthy terms and conditions documents, rather than being easy to find on websites. Some policies did not contain key information, such as the timescale within which the complainant could expect their complaint to be resolved. All policies named an ADR provider to whom unresolved complaints could be escalated, however few explained the independent role of the ADR provider, or that the service was free to the consumer.

The consultation also proposes to require licensees to complete their complaints procedure in full, and either resolve the complaint or agree that they are at a stalemate or ‘deadlock’ with the customer, within eight weeks of receiving the complaint.

General ‘readability’ of consumer information

The consultation also highlights concerns that not all of the information that licensees prepare for consumers is easy to understand. The Gambling Commission is seeking views on whether it should introduce a standard of readability that all licensees must meet when preparing consumer facing material to ensure it is clear and transparent. The Commission would like views from the industry on what such standards might look like.

Regulatory next steps

The Gambling Commission would like responses to the consultation by 5pm on Sunday the 22nd April 2018.

Considerations for firms

Given the extent of the potential changes and the increased powers the Gambling Commission will have to impose the full range regulatory powers, including financial penalties, firms should be assessing the potential impacts of the enhanced requirements that may be imposed onto them.

The potential change in rules will require licensees to review their existing arrangements and ensure they comply with the new requirements. Questions for firms include:

• Does your firm produce clear and easy to understand advertisements?
• What arrangements do you have in place with third party marketing companies, and are you comfortable being accountable for their actions?
• What does your current complaints process look like, and can customers easily find how to complain on your website?
• How accessible is your customer facing material?