Gambling Commission Customer Interaction Guidance: Update

The Gambling Commission (the “Commission”) has updated the customer interaction guidance for remote gambling operators under Social Responsibility Code Provision (“SRCP”) 3.4.3 of the Licence Conditions and Codes of Practice (“LCCP”). Operators will be required to take these changes into account from 31 October 2023.

Background

Last year, the Commission introduced SRCP 3.4.3 as a means of strengthening rules to identify and protect customers at risk of harm, ensuring operators take timely, proportionate action to reduce harm and evaluate their interactions and related processes. The majority of new requirements came into force on 12 September 2022, with the remainder (relating to marketing and bonus offers) coming into force shortly after on 12 February 2023.

The Commission published its related customer interaction guidance at the same time as introducing SRCP 3.4.3 (the “Guidance”), but then ran a consultation on the Guidance following feedback from the industry (the “Consultation”). The Consultation asked stakeholders about their experiences of the new requirements under SRCP 3.4.3 and about how the Guidance could be improved. That Consultation closed in January 2023 and the Commission published its response in August 2023, amending aspects of the Guidance in light of it. Remote operators must now take the Guidance into account from 31 October 2023 (but ideally as soon as possible).

SRCP 3.4.3 and the related Guidance are more prescriptive than the previous SRCP 3.4.1 and its guidance. This article sets out the new requirements, key aspects of the Guidance as well as highlighting changes as result of the Consultation.

Requirements of the new SRCP 3.4.3 and Guidance

Requirement 1

Licensees must implement effective customer interaction systems and processes in a way which minimises the risk of customers experiencing harms associated with gambling. These systems and processes must embed the three elements of customer interaction – identify, act and evaluate – and which reflect that customer interaction is an ongoing process as explained in the Commission’s guidance.

The Guidance in respect of requirement 1 states that it requires an ongoing process of monitoring and the use of indicators of harm to flag signs that a customer may be at risk of harm. Action must be tailored to the number and type of indicator. Indicators must be reviewed, action escalated in response to those indicators and operators are expected to consider the effectiveness of the action and evaluate its impact before repeating the process again. 

Requirement 2

Licensees must take into account the Commission’s guidance on customer interaction for remote operators as published and revised from time to time.

This requires operators to take into account the Guidance, which has been developed to support the effective delivery of customer interaction systems and processes in place to meet the outcomes of identifying and minimising harm. It also aims to ensure operators take into account amendments to the Guidance over time.

Requirement 3

Licensees must consider the factors that might make a customer more vulnerable to experiencing gambling harms and implement systems and processes to take appropriate and timely action where indicators of vulnerability are identified. Licensees must take into account the Commission’s approach to vulnerability as set out in the Commission’s Guidance.

The Guidance reminds operators that when customers are in a vulnerable situation, they may be significantly less able to understand the risks of gambling and may be at higher risk of experiencing negative outcomes from gambling. It emphasises that the Commission considers a customer is in a vulnerable situation if they are “somebody who, due to their personal circumstances, is especially susceptible to detriment, particularly where a business is not acting with appropriate levels of care”.

The Guidance also lists various factors which may be relevant as part of overall consideration of risk. These include personal and demographic factors; situational factors; behavioural factors; market related factors and access factors.

Prior to the Consultation, there were concerns that screening all customers for all vulnerabilities was a requirement and that this would unnecessarily intrude on customers’ private lives. The Commission has in response updated the Guidance for requirement 3 to confirm that it does not intend licensees to screen all customers for each of the factors of vulnerability listed in the Guidance. This may relieve some of the burden of screening every customer, but operators are still expected consider and act on the information that they have available to them as against the range of vulnerabilities.

The Commission also made changes to the examples of vulnerability and format of the Guidance, focusing on factors it considers most useful and relevant. It has also noted the importance of temporary or intermittent vulnerable situations, added further detail on considerations relating to young adults and included links to research on gambling harms. The Guidance emphasises that action should be tailored to individual circumstances, depending on the number and severity of the indicators of harm, that operators should use all information available to them and sometimes it will be appropriate to offer support to customers in a vulnerable situation rather than impose a restriction on gambling. These changes give operators more insight into the Commission’s expectations in respect of vulnerability and confirms that it does not support a one-size fits all approach.

The Commission’s response to the Consultation also provides operators with guidance on dealing with vulnerability in the context of data protection requirements. It notes that customer interaction requirements have been in place for many years and refers operators to relevant guidance published by the Information Commissioner’s Office.

Requirement 4

Licensees must have in place effective systems and processes to monitor customer activity to identify harm or potential harm associated with gambling, from the point when an account is opened.

According to the Guidance, licensees must identify customers that may be at risk of harm by using all of the information available about the customer. This means balancing financial, time, and behavioural indicators and applying knowledge about their overall customer base and individual customers. Licensees must integrate their systems so that staff have a more complete picture of a customer’s activity. They must monitor overnight gambling and staff should receive appropriate training. Records of actions and interactions should also be kept.

Requirement 5

Licensees must use a range of indicators relevant to their customer and the nature of the gambling facilities provided in order to identify harm or potential harm associated with gambling. These must include customer spend; patterns of spend; time spent gambling; gambling behaviour indicators; customed-led contact; use of gambling management tools; and account indicators.

The Guidance sets out examples in relation to each indicator. Time and spend indicators include: amount of money and time, as well as frequency of deposits, time of day, and escalation in deposit levels. Gambling behaviour indicators include gambling on multiple products, chasing losses and erratic betting. Customer-led contact includes information or hints from customers, frequent complaints about not winning or talking about the negative impact of gambling. Use of gambling management tools includes previous self-exclusions, changing deposit limits or a refusal to use gambling management tools. Account indicators includes failed deposits, multiple payment methods, pre-loaded cards, and e-wallets, all of which might indicate a customer is gambling with money they don’t have.

Following the Consultation, the Commission has added additional detail to the Guidance in response to comments from respondents that the Guidance should set out good practice examples of ‘strong’ indicators of harm. However, the Commission has not added examples or defined the indicators as ‘strong’ to allow for flexibility in the method of implementation by operators (noting in other contexts operators frequently call for flexibility). The updated Guidance acknowledges that there might be one indicator which itself is a strong indicator of harm; there may be a customer behaviour that is a strong indicator of harm because it is particularly pronounced or unusual; or there may also be a number of less serious indicators which might amount to a ‘strong’ indicator of harm together. Ultimately, operators should remember that strong indicators of harm will depend on the specific facts of each case. The Guidance also now makes reference to evasiveness, expressing anger, and not withdrawing winnings as indicators of harm.

Requirement 6

In accordance with SR Code Provision 1.1.2, licensees are responsible for ensuring compliance with the requirements. In particular, if a licensee contracts with third party business-to-business providers to offer any aspect of the licensee’s business related to the licensed activities, the licensee is responsible for ensuring that systems and processes are in place to monitor the activity on the account for each of the indicators in paragraph 5 (a-g) and in a timely way as set out in paragraphs 7 and 8.

The Guidance states that the aim of this requirement is to ensure that customers are given the same level of protection even where the licensee contracts with third parties and that action is taken in a timely manner including automated solutions. If the licensee contracts with third party B2B providers to offer part of its gambling facilities, then the licensee is responsible for ensuring that systems and processes are in place to monitor the activity on the account for each of the minimum indicators of harm.

Requirement 7

A licensee’s systems and processes for customer interaction must flag indicators of risk of harm in a timely manner for manual intervention, and feed into automated processes as required by paragraph 11.

The aim of this requirement is to ensure that licensees identify harm or potential harm, and that action is taken in a timely manner to minimise potential further harm. The Guidance states that swift action is often achieved by automated processes and licensees will need to include indicators of harm and aggregated indicators that trigger automated action.

Requirement 8

Licensees must take appropriate action in a timely manner when they have identified the risk of harm.

In relation to requirement 8, the Guidance emphasises that licensees should act quickly and early where it is concerned that a customer might be experiencing harm. This is to stop or prevent the harm worsening.

Action must be tailored, depending on whether a customer has been exhibiting low level indicators of harm over time, or if a higher level of harm has been identified sooner. Licensees should consider how customers prefer to be contacted and encourage customers to think about their gambling. Customers’ responses will help licensees offer the right kind of help and support.

The Guidance also reminds licensees that they may need to interact with customers a number of times if earlier interactions have not had the required impact and that record keeping will assist with decision-making.

Requirement 9

Licensees must tailor the type of action they take based on the number and level of indicators of harm exhibited. This must include, but not be limited to, systems and processes which deliver tailored action at lower levels of indicators of harm which seeks to minimise future harm; increasing action where earlier stages have not had the impact required; strong or stronger action as the immediate next step in cases where that is appropriate, rather than increasing action gradually; reducing or preventing marketing or take-up of bonus offers where appropriate; refusing service or ending the business relationship where necessary.

The Guidance states that the aim of requirement 9 is to set minimum requirements for the type of action that must be included within a licensee’s systems and processes to minimise harm and to ensure that a licensee’s response is proportionate to the indicators of harm. The Guidance acknowledges that licensees have a range of actions they apply in response to identified indicators of harm and sets out Guidance in relation to each of ‘early tailored action’, ‘medium tailored action’, ‘medium strong or strong action’ and ‘very strong action’. The strength of action should increase where the level of indicators of harm has increased, or previous action has not worked. The Guidance sets out examples of what such action might consist of.

Prior to the Consultation, the category labelled ‘medium strong’ was referred to as ‘stronger’. The Commission has updated the Guidance for requirement 9 to rename this category and has suggested that limiting, rather than preventing marketing in the medium category of risk aligns with the increasing escalation of action. This is a useful reminder to operators that the Commission expects operators to put in place an increasing scale of action when it comes to indicators of harm.

Requirement 10

Licensees must prevent marketing and the take up of new bonus offers where strong indicators of harm, as defined within the licensee’s processes, have been identified.

The Guidance states that where there are strong indicators of harm, direct and targeted marketing and the take up of bonuses should be prevented as soon as practicable. The Commission expects that licensees will use automated processes in some cases to assist with the timeliness of the response and there should be processes to extend the restriction across all product types and where relevant across the group. The Guidance then sets out how licensees can assess what constitutes a bonus. In summary, generic in-game mechanics applied to all customers are unlikely to be considered a bonus, but individually targeted offers or inducements probably are.

As a result of the Consultation, the Commission has updated the Guidance for requirement 10 to provide more information as to what constitutes a ‘bonus offer’, which will alleviate concerns amongst operators that there was a lack of clarity around this point. It acknowledges the potential unintended consequences of restricting bonuses in terms of unfairness but considers that the restrictions are required to respond to serious indicators of harm. The Guidance has also been updated to emphasise that the requirements only relate to new bonus offers, rather than those which a customer is partway through, and that they do not relate to non-monetary bonuses. The Commission confirms though that the Guidance continues to provide guidance in relation to such bonus offers to enable operators to consider what is good practice and to ensure a fair and transparent outcome for those customers that show strong indicators of harm whilst partway through a bonus offer.

Requirement 11

Licensees must ensure that strong indicators of harm, as defined within the licensee’s processes, are acted on in a timely manner by implementing automated processes. Where such automated processes are applied, the licensee must manually review their operation in each individual customer’s case and the licensee must allow the customer the opportunity to contest any automated decision which affects them.

The Guidance states that to ensure a timely response to identification of significant harm, again, licensees need to have automated processes in place. By way of example, if a significant level of harm is identified, it might be appropriate to place an immediate block on further gambling, a block on deposits, or to impose a deposit limit.

The Commission has clarified the Guidance for requirement 11 following the Consultation. The original version of the Guidance suggested that operators were required to manually review all automated decisions and there were concerns as to the administrative burden of that process. Now, the updated Guidance confirms that operators are required to contact customers to inform them of an automated decision where it has legal effects or similarly significantly affects customers, for example by disrupting customer choice. If a customer contests an automated decision, the gambling operator must review it. Otherwise, a substantive review of the automated decision is not required. This will likely be considered a positive development for operators.

Requirement 12

Licensees must implement processes to understand the impact of individual interactions and actions on a customer’s behaviour, the continued risk of harm and therefore whether and, if so, what further action is needed.

The Guidance states that the aim of requirement 12 is to ensure licensees evaluate the impact of their interventions to determine whether further action is needed to minimise harm and that further action is delivered in a timely and effective manner. The Guidance reminds licensees that although not every customer who receives an interaction will require active follow up, many will, and such follow up should be proportionate to the extent of the harm displayed. The Guidance suggests that the impact of the action on the customer can be assessed by looking at and comparing the indicators of harm and behaviour before the action, whether the action was customer or licensee-led, how the licensee acted and what was communicated to the customer and the change in indicators of harm and behaviour following the action.

Requirement 13

Licensees must take all reasonable steps to evaluate the effectiveness of their overall approach, for example by trialling and measuring impact, and be able to demonstrate to the Commission the outcomes of their evaluation.

In relation to requirement 13, the Guidance states that its aim is to provide assurance that licensees’ customer interaction systems and processes are effective. It requires that operators conduct quality assuring individual customer interactions, identify staff development needs, and highlight good practice. Again, effective records must be kept, and licensees should have a process in place to ensure industry learning, research and industry best practice is reviewed and implemented where appropriate.

Requirement 14

Licensees must take account of problem gambling rates for the relevant gambling activity as published by the Commission, in order to check whether the number of customer interactions is, at a minimum, in line with this level. For the avoidance of doubt, this provision is not intended to mandate the outcome of those customer interactions.

The purpose of this requirement is to provide a backstop protection to ensure that customer interaction takes place as a minimum for the proportion of the customer base as the problem rate for the gambling activity. According to the Guidance, licensees should ensure they are on track to meet the minimum levels of customer interactions over an annual period and should assess progress on a monthly basis to do so.

Respondents to the Consultation did express some concern about requirement 14 decreasing the quality of customer interactions in order for gambling operators to hit specified levels, but the Guidance has remained unchanged. The Commission noted in response to this concern that the requirement to take account of problem gambling rates is part of SRPC 3.4.3 and the aim of the requirements is to improve the quality and effectiveness of interactions whilst also ensuring a proportionate number of customers are interacted with. The Commission also confirmed that the Health Survey 2018 is currently the most relevant source of figures of problem gambling rates by activity.

What does this mean in practice?

As per requirement 2 of SRCP 3.4.3, operators must take into account the Guidance on customer interaction for remote licensees, which comes into effect on 31 October 2023. SRCP 3.4.3 is more prescriptive than SRCP 3.4.1 and the related Guidance more comprehensive. The Commission has however clarified a number of its expectations in the Guidance following the Consultation, which will assist operators in complying with its requirements.

Operators should take the time to carefully review and analyse the extent to which their customer interaction policies, procedures and controls require development in the light of the Guidance. In this regard, it is important to note that where language such as, ‘must’ or, ‘the Commission expects’, is used, the Guidance is intended to reflect the requirements of SRCP 3.4.3. In contrast, where it uses language such as ‘should’, the approach or action is not strictly required under SRCP 3.4.3, but operators are required to take it into account due to it being set out in the Guidance. 

Operators should also be aware that the Commission’s consultation in respect of proposed changes in relation to consumer choice on direct marketing, strengthening age verification in premises, remote game design, financial vulnerability and financial risk checks and the conduct and composition of regulatory panels closed last week. The outcomes of the consultation will be published in due course, and the changes in respect of financial vulnerability and financial risk in particular are likely to further influence or build on the approach that operators take to customer interaction.