UK Financial Risk Checks The Real Impact
On 30 August, the UK Gambling Commission (UKGC) launched a pilot programme to test online gambling financial risk assessments with the aim of ‘preventing cases where customers were able to spend large amounts in short spaces of time without any checks, resulting in significant harm’. Roger
Redfearn-Tyrzyk, VP Global Gaming at IDnow, explores the possible ramifications of the new financial risk checks for identity verification and fraud.
Te UKGC’s pilot programme will last approximately six months and focus on implementing affordability checks to encourage increased customer protection and reduce monthly deposit spending. Tis initiative was in response to the worrying increase in ‘problem gamblers’, which is estimated to total around 300,000 in the UK, with approximately 14 million active gamblers, compared to 10 million in April 2020. Considering this dramatic increase, the UK government will now mandate operators to conduct financial risk checks (FRC) on their players.
What does this mean for operators?
With the UKGC’s proposed changes, operators are now required to conduct financial risk checks to assess whether a customer’s gambling activity may be harmful to their financial circumstances. As such, any operators who fail to protect their customers risk substantial fines and damage to their brand reputation. Even before this new legislation, the UKGC issued £44.6 million worth of fines in 2022, a 76 per cent rise from 2021, illustrating the level of risk of non- compliance.
Te impact of vulnerability checks
One of the major concerns for operators and players alike was how these checks would impact upon the player experience, and who exactly would be subjected to checks. In response, the Commission confirmed the introduction of financial vulnerability checks - a basic check using publicly available data to identify red flags of financial
vulnerability, for example, bankruptcy. For many players, this has become a source of major anxiety, especially with suggestions that financial risk and vulnerability checks be conducted at £125 net loss within a 30-day period, or £500 within a rolling-year period. As a result, many licensees are cutting back on offering VIP or loyalty clubs at online casinos, as these are inherently designed to reward customers who spend large sums of money. Stake limits will be introduced, consulting on a limit ranging from £2 to £15 per spin. Greater protections have also been considered for players aged 18 to 24 years, a group that the UKGC considers to be more vulnerable to problem gambling.
Te real impact of financial risk checks
Te now obligated financial risk checks are likely to significantly impact the quality of the gaming experience. Tis will be triggered ‘at unusually high loss levels where it seems proportionate to understand more about the potential risk of harm’. According to the UKGC, all these checks would be proportionate and would only affect the high spending and high losing players. UKGC estimations show that so-called ‘light touch financial vulnerability checks’ would be carried out on 20 per cent of accounts with only three per cent of players undergoing more in-depth financial risk assessments.
Furthermore, just a tenth of that three per cent – in other words 0.3 per cent of players – would be asked to provide additional financial information. For the significant majority of players (99.7 per cent), frictionless data checks would be sufficient. However, this may look
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FRAUD PREVENTION
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