Gambling operators licensed by the Gambling Commission are required by LCCP social responsibility code provision 6.1.1 (which has the force of a licence condition) to:
- put in effect a written procedure for handling customer complaints and disputes and
- offer dispute resolution by an ADR provider.
This is to ensure that customers with a dispute about the outcome of their gambling transaction that has not been resolved at the first stage of a licence holder’s complaints procedure are offered dispute resolution free of charge.
However, that is no longer where matters rest. The EU Directive on alternative dispute resolution (“ADR”) for consumer disputes required EU member states to designate competent authorities to approve, monitor and maintain lists of ADR entities.
In the UK, the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (thankfully abbreviated to “the ADR Regulations”) designated the Gambling Commission as the competent authority empowered to approve all bodies that seek to offer dispute resolution services in the gambling sector.
With effect from 31 August 2015, British licensed gambling operators have been required to use, for the purposes of compliance with LCCP Social Responsibility code provision 6.1.1, one or more of the ADR entities on the Commission’s approved list. At the time of writing, eleven ADR bodies have been approved.
Both ADR entities and gambling operators were required to be fully compliant with the ADR Regulations by 1 October 2015, meaning that, amongst other things, they must now provide in their terms and conditions and on their websites the name, contact details and website address of the approved ADR entity or entities that they use to resolve disputes.
The Commission expects operators to offer ADR, which is binding on the gambling operator (if accepted by the customer) for disputes that would otherwise be taken to the small claims court (ie disputes of not more than £10,000). For disputes over £10,000, the ADR procedure need not be binding.
The ADR entities are able to refuse to deal with a dispute on the ground that the customer has not submitted the complaint within a prescribed time limit, provided that this is not less than 12 months from the date upon which the operator has notified the customer that it is unable to resolve the complaint to the customer’s satisfaction.
As a result, quite apart from the SR code provision 6.1.1 requirements, licensed operators must retain information and records relating to disputes for a minimum of 12 months. Failure to hold such records and information may result in the dispute being resolved against the operator if the customer has records that cannot be challenged by the operator.
Although the LCCP requirement to offer an ADR entity applies only to businesses that contract directly with consumers, the Commission expects B2B operators to support the ADR processes by providing information to the gambling operators with which they contract to support investigation of a dispute.
SR code provision 6.1.1 also requires licensed operators to submit to the Commission a copy of the decision on, or note of the outcome of, each dispute referred to an ADR entity or arrange for this to be submitted by the ADR entity.
ADR experience in practice
There has been a substantially increased number of remote gambling operators licensed by the Commission since the new British licensing regime came into force a year ago as a result of the changes introduced by the Gambling (Licensing and Advertising) Act 2014. In addition to assisting such licensed operators, my business (Clifton Davies Consultancy Limited) has received a correspondingly increased number of requests from consumers to assist them in relation to disputes with and complaints about operators.
In such circumstances, these requests are usually at the stage where the operator’s complaints process has been exhausted. The customer then has three basic options:
- refer the matter to the appointed ADR entity,
- raise a complaint with the Commission (if appropriate) or
- pursue a remedy by way of court proceedings.
Each ADR entity has its own Terms and Conditions that will govern the procedure to be adopted when a dispute is referred to it. Typically, these will require the customer to:
- make a written submission setting out the full circumstances of the dispute and, where relevant, referring to any relevant rules of the operator and
- send in any documents or evidence that he or she holds and indicate any evidence relevant to the dispute that the customer thinks the operator might hold,
following which the operator will be required to make a full written submission in relation to the circumstances of the dispute, supported by evidence of all factual assertions, including all relevant data stored on the operator’s computer systems.
This does not mean that ADR entities always accept jurisdiction. I have seen cases where the ADR entity has declined to adjudicate because it has considered the dispute in question to be frivolous or vexatious. I have seen others where it has regarded a complaint as falling outside its remit because it does not relate to the outcome of a gambling transaction but instead to a potential breach of the LCCP, as a result of which the ADR entity recommends that the matter should be raised with the Gambling Commission.
However, the Commission does not investigate individual complaints and it cannot and will not rule that an operator must reimburse or pay monies to a complainant. Instead it will take account of the information that is provided to it with a view to considering the continuing suitability of the operator in question to hold a licence and/or whether to take compliance action against the operator. This said, for reasons of confidentiality and data protection, it will not provide specific feedback on any regulatory investigation that it conducts, although if it does impose a regulatory sanction it publishes details of this on its website.
If the Commission does impose such a sanction, the operator may feel compelled to compensate the complainant. Even if it doesn’t, the complainant may find his or her chances of success in court proceedings greatly assisted evidentially by the fact that a sanction has been imposed.
Finally, it remains to be seen whether the coming into force of the Consumer Rights Act 2015 on 1 October will lead to an upturn in the number of disputes between operator and customer. I can see scope for this in relation to such contractual provisions as the “palpable error” rule and acceptance of bets even though the payout would be more than allowed by the operator’s terms. In this respect, it will be helpful to all if the Commission publishes advice on terms and conditions that it considers unfair, as it indicated it might do in its “Strengthening Social Responsibility” document published earlier this year.
Article by David Clifton – Director of Clifton Davies Consultancy