David Clifton: Licensing Expert – More of the same with yet more to come…

David Clifton

You’ve already read the headlines arising from the Gambling Commission’s 1 August response to its January 2018 consultation Proposed changes to licence conditions and codes of practice linked to the fair and open licensing objective.

With effect from 31 October 2018 – just a matter of weeks away – changes to the Commission’s Licence Conditions and Codes of Practice (“LCCP”) will mean that gambling operators licensed by the Commission who breach advertising rules or consumer law will face tougher enforcement action.

The Gambling Commission calls it “a crackdown on operators who don’t treat customers fairly”. It justifies this by saying: “we exist to safeguard consumers and the wider public by ensuring that gambling is fair and safe”. You won’t find that justification for its existence in the Gambling Act 2005, which was introduced against a policy background of “light touch” and “proportionate” regulation, under which the Commission would merely be guided by, and have regard to, the licensing objectives when exercising its regulatory functions.

There will be those within the industry who will no doubt complain that the forthcoming LCCP changes amount to yet further ‘regulatory creep’ on the part of the Commission. However, none of the forthcoming changes could conceivably be described as unexpected, intended, as they are, to:

  • strengthen the rules on advertising, unfair terms & practices and complaints & disputes, and
  • provide stronger protection for consumers and ensure they are treated fairly by gambling businesses.

In my view, no sector of the British gambling industry will be doing itself any favours to take issue with the Commission on this latest development, because the ground leading up to each of the changes (that I summarise below) has been well and truly trodden before and, by and large, the changes represent the Commission’s reaction to years of regulatory boundaries being pushed so far by operators that public opinion has turned against the industry as a whole. No clearer indication of this could be given than that an unprecedented 81 of the total 130 formal responses to the consultation were received from consumers.

Operators can expect more of the same in future, the Commission commenting in its response that it welcomes “direct engagement from consumers and consumer groups and will continue to explore opportunities to strengthen the voice of consumers as part of [its] work”. It adds that “these changes should be viewed as one part of a much wider programme of work in which regulators, industry and consumer groups work together to deliver a fairer and more trusted gambling market”.

Marketing and advertising

Insofar as marketing and advertising is concerned, the requirement for compliance with the UK advertising codes is to be elevated from an ordinary code provision of the LCCP to a social responsibility provision. That is a very material change because compliance with the advertising codes will effectively become a condition of an operator’s licence, with the consequence that a breach may render the licence-holder subject to the Commission’s full range of regulatory powers. It means, for example, that advertising that glamorises gambling or that appeals particularly to children and young persons (which has of course been the subject of very considerable adverse media publicity over the last year) could potentially result in not only imposition of a substantial financial penalty but even licence suspension or revocation, as well as exposing the licence-holder to the risk of prosecution – a much more severe range of sanctions than a slap over the wrist from the Advertising Standards Authority.

Expect more gambling advertising developments soon, Paddy Power Betfair having recently been quoted in The Guardian as saying it is “supportive of further regulation … to reduce the volume of pre-watershed TV advertising to protect young children” and William Hill having previously said that it is “sympathetic to some sort of curb or … review around the level of advertising”. Similar views have been expressed by Simon Thomas, Chief Executive of the Hippodrome Casino, so it is yet possible that we may see further changes made to the Gambling Industry Code for Socially Responsible advertising, compliance with which is to remain an LCCP ordinary code requirement.

Affiliates

As I have long forecast, the Commission has now made it clear that it has no plans to introduce a licensing regime for marketing affiliates. Instead, it is to be made even more abundantly clear in the LCCP that gambling operators are responsible for the failings of, and will face enforcement action for advertising breaches by, their affiliates. For what it is worth, I strongly suspect that we will see a differing approach to the licensing of affiliates taken by various U.S. states introducing their new sports betting regimes.

Spam texts and emails

My December 2016 article for SBC News entitled Affiliates (and operators) in the ICO’s firing line) focused on the Information Commissioner’s Office investigation into large numbers of spam texts linked to the gambling sector. Now, to deter operators from sending ‘spam’ emails or texts, a new social responsibility code provision is to be introduced into the LCCP to ensure that no direct electronic marketing is to be sent without the specific, informed and withdrawable consent of the recipient. If consent is withdrawn, the licence-holder will have to ensure, as soon as practicable, that the customer is not contacted with any further electronic marketing unless he or she consents again. This change has the full support of the ICO and operators are advised to have regard in this respect to the ICO’s updated guidance on direct marketing.

Unfair terms and practices

As has been widely publicised (including in my February 2018 SBC News article entitled Win or lose …. do it fairly!), the Competition and Markets Authority and the Gambling Commission have been working together since October 2016 to stamp out unfair terms and conditions of, and misleading practices by, UK licensed online gambling operators. It is hardly surprising then that LCCP changes are now to be introduced to licence condition 7.1.1 to make it quicker and easier for the Commission to take action where a licence-holder is not following the rules covering consumer notices (for instance in FAQs on operators’ websites, information in promotional material or signs in gambling premises), changes to customer contracts and unfair commercial practices at any stage of a customer relationship. All terms and conditions will also have to be made available to consumers in an easily accessible way.

The Commission has noted but remains non-committal about, a call from some respondents to the consultation for guidance on how operators can ensure that consumers are being treated fairly. What is clear, however, is that the Commission is continuing to test whether remote licensees have made all necessary changes to their terms and practices in order to comply with consumer protection law and to meet existing licence obligations and that what it learns from this process will inform any future guidance it may publish.

Consumer complaints

As summarised in my April 2017 SBC News article entitled Alternative dispute resolution(ADR) …. Change is on the way, the Commission has previously concluded that “the complaints system in the gambling industry is not working for consumers, who have found it difficult to access, time-consuming to use, and they question whether it is independent and transparent”.

It now intends to introduce changes in order to ensure that complaints policies and processes are clear, fair, open, transparent and accessible so that consumers can easily access information about how to complain. These changes will include:

  • introduction of a time limit of 8 weeks from receipt of a customer complaint about licence-holders to complete their complaints procedure (as long as the customer co-operates with the complaints process in a timely manner),
  • the use of ‘deadlock’ letters from licence-holders to consumers to confirm that the end of their internal complaints process (or the eight-week limit) has been reached and that the consumer is able to escalate the complaint to an ADR provider, and
  • inclusion within new guidance information about (a) the licence holder’s arrangements with ADR providers, (b) information that it should provide to consumers and (c) information that it should provide to the Commission, in order to make clearer its focus on the desired outcome that complaints are handled in a clear, fair, open, transparent, timely way.

Alternative dispute resolution

The Commission believes that the above consumer complaint changes should reduce the number of cases that need to be escalated to ADR. Nevertheless, the Commission is working to develop and implement “before the end of this financial year” a new framework of additional standards for ADR providers (which seems likely to include widening the criteria of disputes they can consider).

Readability

The Commission’s consultation sought views on the introduction of ‘readability’ standards with a view to ensuring that operators’ customer-facing documents (including terms and conditions) are expressed in plain and intelligible language rather than in ‘legalese’. We can expect new requirements on this at some stage in the future.

Right to bet

This subject did not form any part of the consultation, but it featured in a number of the responses received from consumers, who expressed frustration that bookmakers choose to restrict the bets they accept from certain customers on commercial grounds. This has led the Commission to comment that “persistent focus on this issue demonstrates a failure on the part of the industry to explain the extent and purpose of the restrictions” which “risks having an ongoing and detrimental impact on the regulation of the industry”. We can expect more on this too.

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David Clifton – Director – ‎Clifton Davies Consultancy Limited

The Betting industry’s regulatory agenda and current context will be discussed at the upcoming ‘Betting on Sports Conference’ (#boscon2018 – Olympia London-18-20 September 2018). Click on the below banner for more information…

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