Customer interaction alert

From 31 October, all Great Britain licence holders will need to comply with new customer interaction requirements. David Clifton runs through what stakeholders will need to be able to demonstrate to the regulator.

In February 2019, the GB Gambling Commission (GC) consulted on proposed changes to requirements prescribed within its Licence Conditions and Codes of Practice (“LCCP”) relating to customer interaction.

Those planned changes arose from what the GC had perceived to be (a) failures by operators to identify activity which could indicate that a customer is experiencing harms associated with gambling, (b) failures to interact promptly or effectively when a customer exhibits indicators of harm and (c) little or no attempt by operators to monitor activity after an interaction has taken place, understand the impact of the interactions or evaluate the effectiveness of policies and procedures.

The GC has now announced that it will implement its changes to customer interaction requirements with effect from 31 October 2019.

The new rules will apply to all holders of a GC licence, other than holders of non-remote lottery, gaming machine technical, gambling software and host licences.

The LCCP changes are to social responsibility code provision 3.4.1 that will in future require as follows:

  1. Licensees must interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling. This must include:
    1. identifying customers who may be at risk of or experiencing harms associated with gambling
    2. interacting with customers who may be at risk of or experiencing harms associated with gambling
    3. understanding the impact of the interaction on the customer, and the effectiveness of the Licensee’s actions and approach.
  2. Licensees must take into account the Commission’s guidance on customer interaction.

The existing LCCP ordinary code provision 3.4.2 (to the effect that operators should (a) work together to share experience and deliver good practice, (b) keep a record of customer interactions and reasons for ruling out an interaction and (c) provide at least induction and refresher staff training on their responsibilities for customer interaction) will disappear.

The GC will instead require those provisions to be met through adoption of measures included within its guidance. It also describes the old ordinary code provisions as being “more appropriately facilitated” through its National Strategy to Reduce Gambling Harms, published in April 2019.

As has been evident from numerous public statements following enforcement action by the GC against operators for regulatory failings over the last six years, the need for timely customer interaction is not just a social responsibility requirement. It is inextricably tied into the required provision of effective anti-money laundering controls.

Failure on the part of GB-licensed remote operators to comply with each of these requirements, notwithstanding the fact that the GC published customer interaction guidance specifically for remote gambling operators in February 2018, have led to increasingly eye-watering fines and financial penalties being imposed.

The new requirement that operators must take such guidance into account can safely be regarded as a warning that such fines and financial penalties will not be deceasing in amount when future failings occur.

The GC has published two versions of its new customer interaction guidance. One is for remote gambling operators, the other is for premises-based operators.

Each guidance is structured in line with the three key outcomes that the GC expects operators to meet as outlined in the new social responsibility code provision 3.4.1, i.e. to:

  • identify,
  • interact and
  • evaluate.

This means that, with effect from 31 October 2019, all operators must be able to demonstrate how their policies, procedures and practices meet those three outcomes.

This does not necessarily mean that every aspect of the GC’s guidance must be followed to the letter.

That is because the GC expressly accepts that compliance can be achieved by operators either (a) implementing the relevant parts of the guidance or (b) demonstrating how and why implementing alternative solutions equally meet those outcomes. However, an operator seeking to rely on option (b) will need to be very sure of its ground.

It should most certainly be noted that the GC is increasingly driving home the warning that financial threshold triggers alone should not be used to determine when a customer interaction should take place.

Instead, in order to decide when to interact, operators should monitor customers’ behaviour sufficiently closely that they can compare what they know about a customer with a range of indicators – markers and behaviours that could indicate gambling-related harm – that are relevant to their own business.

As a result, a “one size fits all” approach should not be adopted. The guidance emphasises that operators should use the right indicators for their business, based on research, experience and shared practice.

It lists some key indicators that are likely to apply to all businesses, but it is quite evident that:

  • an understanding of behavioural analytics will be essential,
  • measures will need to be put in place to ensure that customers receive the same level of protection (including prompt interaction unless this is inhibited by a customer’s behaviour) at all times that an operator is providing facilities for gambling, including overnight,
  • the GC’s expectations in relation to customer affordability checks (clearly spelt out in the guidance) cannot be ignored,
  • operators need to start planning for the changes now, so that staff training on the new requirements takes place before the 31 October deadline and
  • even more resources (both human and technological) will need to be applied by operators if the three key outcomes are going to be achieved to the standard that the GC expect

David Clifton is a founding director of Clifton Davies Consultancy Limited and a consultant to Joelson Wilson Solicitors. David has specialised in gambling law since the early 1980s and was among the first UK lawyers to advise the online gambling pioneers in the mid-1990s.