UKGC announces new customer funds rating system
Operators have eight weeks to apply new ratings to customer funds
The Gambling Commission (UKGC) has confirmed its latest set of amendments to the Licensing Codes of Practice (LCCP) relating to the holding of customer funds by operators.
Under the new rules, which apply retrospectively as of 29 April, a customer funds insolvency system is introduced, replacing the current rating system with new ratings standards.
Operators are required to grade the protection of customer funds in insolvency as: not protected, medium level of protection and a high level of protection.
In all cases operators must disclose ratings to customers in their terms and conditions and at the point at which a customer deposits money with the operator providing their consent prior to any gambling.
Operators are also required to inform customers when these ratings change and no gambling can take place until the changes have been acknowledged by the consumer.
The stated aim of these changes is to “clarify the level of protection afforded for customer funds in the event of insolvency and reduce the likelihood of consumers being misled.”
The UKGC initially consulted on these measures in December 2018, at which point the ratings system had four categories: not protected, basic, medium and high. However, the basic, medium and high categories were changed following feedback from operators responding to the consultation.
The previous consultation proposed allowing operators up to four weeks to implement any changes, however several responses received stated this would be challenging due to potential circumstances which would be out of operators’ control (e.g. the updating of apps).
In the light of this feedback, the UKGC has agreed to extend the implementation time to eight weeks giving more time to operators to make the required changes.
Speaking about the potential impact of these changes on operators, Richard Williams, consultant solicitor at Keystone law said the new ratings standards could “spook” players, despite operator arrangements for holding funds not changing.
“Operator failures are high profile and generate adverse publicity if customers lose funds, so I wonder whether we may see some mandatory funds protection measures being introduced by the Gambling Commission in the not too distant future.” Williams said.
“Operators will also need to revise their T&Cs to replace references to ‘basic’ protection with ‘not protected’. I am sure this will be the subject of compliance assessments from the Gambling Commission before long.”