At a time when most of us are winding down - or those in retail or leisure, winding up - for the holiday season, comes a new (and important) consultation from the Gambling Commission (GC) on proposed changes to its Licensing, Compliance, and Enforcement Policy (‘the Policy’). The 15 substantive questions potentially impact on the application process (5 – 10), the management and monitoring of gambling businesses (11 – 13) and the review process (14 – 19). The breadth of the proposals mean that it is most important that responses are submitted by all those with a stake in the industry, whether they be operators, advisors (who will be particularly affected by the proposed procedural changes), affiliates, NGOs - or simply interested members of the public with views to express.

The questions (paraphrased – please refer to the Consultation for the full detail of the measures proposed) address the following broad issues:

[5] Naming of financial products - Should the GC grant operating licences to products ‘whose name, branding, marketing or game rules contain language associated with financial products such as “stock”, “share”, “index” or “investment”’?

[6] Incomplete applications - Does the GC’s proposed additional wording concerning incomplete applications ‘provide[ ] greater clarity for applicants?’

[7] Relevant persons - Would including references to ‘shadow directors, persons or other entities who are controllers of the applicant and/or those who are its ultimate beneficial owners’ in guidance concerning operating licence applications assist operators in understanding what is a relevant person and the provision of necessary information?

[8] Delayed implementation - Should the Commission add a paragraph to the Policy setting out its expectation that operating licences and PMLs will be used within a reasonable period of time of granting?

[9] Suitability of applicants - The Commission wants to make it clearer to applicants how it considers the suitability of applicants (e.g. as regards Identity and ownership, Finances, Integrity, Integrity and Criminality) and make it explicit that it will look beyond the applicant entity. It also wants to make clear the matters it considers in respect of each of the elements of suitability.

[10] Incomplete applications - Apparently the Commission still regularly receives applications for operating licences that do not include full and open information as to the source of funding for the operation, nor full and frank information about all those relevant persons connected to an applicant. It therefore has to request further information, and this is sometimes resisted. This delays a determination of the application and can result in its refusal. The Commission propose to provide greater clarity by introducing an additional explanation of its requirements.

[11] Matters to report - The Commission wants to add examples of the types of changes and matters that are important for a licensee to monitor and report to the Commission because of the potential impact that not reporting these may have on a licensee. The examples include, but are not restricted to: changes in ownership/control; submission of timely and accurate regulatory returns and submission of timely variation application if a licensee is likely to exceed the fee category limit of its licence.

[12] Internal processes and procedures - Proposal 12 sets out multiple minor amendments to internal processes and procedures which the GC wants to reflect in the Policy.

[13] Virtual assessments - Like many other organisations the GC has found that certain operations can be conducted remotely at far less expense. (It is my experience that operators may not always feel that they have been able, however, sufficiently to explain the actuality of their complex processes and experience through such a medium). The Commission proposes adding the following paragraph to its Policy:

Remote compliance assessments

The Commission may conduct remote compliance assessments for the purposes of determining whether activities are being carried on in accordance with the conditions of the operator's licence or determining the suitability of the licensee to carry on the licensed activities. Such assessments may be conducted using video conferencing platforms such as Skype. During such assessments the Commission may request sight of documents and records held by the licensee, including customer records and the audit trail in relation to customer accounts.

[14] Officials’ initial judgements - Proposal 14 seeks to avoid the understandable confusion which some have experienced in the past concerning Commission officials’ initial judgements to operators following an investigation and expression of likely outcomes when these do not reflect the qualitative judgements set out in the framework set out in paragraph 4.19 of the Policy. The proposed changes seek to clarify the decision-making process.

[15] “Special measures” - The GC proposes to add an important new paragraph to the Policy which sets out the place and purpose of the “Special measures” process as an alternative to a s116 review. The effect of Special Measures is that the licensee will be invited to submit and agree an urgent action plan to rectify the regulatory failings identified. By this means, it suggests ‘the operator quickly achieves compliance and both operator and Commission avoid the cost and time involved in a s116 review.’ Views are invited.

[16] Further preliminary findings - The GC seeks to explain why, in certain instances, issuance of further preliminary findings is required particularly where, in responding to previously issued findings, new evidence is introduced. A policy change is proposed to reflect this state of affairs.

[17] Financial resources available to licensees - Responses are invited on the Commission proposal to explain that it may request financial information regarding the financial resources available to a licensee, including but not limited to its own resources and those of any parent or group company or ultimate beneficial owner. In the absence of sufficient information, the Commission will infer that the licensee has the resources to pay such financial penalty as is appropriate in the circumstances of the case.

[18] Expediting hearing - New wording to the Policy is proposed to reflect the GC’s stated commitment to expediting hearing before the regulatory panel wherever possible.

[19] Timing of settlement proposals - The Commission complains that “increasingly there are too many occasions where settlement proposals are made at a late stage of our investigation process, or approached as if a licence review is a commercial dispute to be negotiated.” Importantly, therefore, the following paragraph is proposed:

“Proposal

The process of regulatory settlement is intended to produce a rapid and fair disposal of a case. Accordingly, regulatory settlements should be offered at an early stage in the process. The Commission will not normally accept offers of regulatory settlements offered after the licensee has made representations on the Commission’s preliminary findings.”

It will be apparent to all those regularly engaging with the Commission in connection with applications - and particularly reviews - that the changes proposed, if implemented, have the potential significantly to alter the process involved. It is therefore extremely important that responses are tendered before the deadline of 9 February 2022.

The full Consultation may be found here.