The case for Financial Risk Assessments needs to be reconsidered in light of the evidence

A lot has changed since the 2023 gambling white paper first set out plans for so-called “frictionless” financial risk assessments.

Since then, the regulated betting and gaming industry has worked through more than 60 separate reforms, introducing a range of new protections designed to identify risk earlier and intervene more effectively. These include stake limits on online slots, enhanced customer interaction requirements and new financial vulnerability checks triggered at relatively low levels of spend, just £150 within a 30-day period.

These were not minor adjustments. They represent a fundamental shift in how risk is identified and managed across the regulated sector.

Ministers were clear about the test these new financial risk assessments would have to meet. They would need to be “frictionless” and proportionate. As the then gambling minister made clear, the system should be rolled out only once it had been proven to work in practice.

That test matters now more than ever, because the case for any new intervention must be judged not against the system that existed in 2023, but against the system that exists today.

Financial risk assessments were proposed as a new, data-led way of identifying customers who may be in financial difficulty, using credit reference agency information rather than manual document checks of a customer’s bank statements or payslips. Over the past two years, the Gambling Commission has been piloting these assessments with operators to test whether they can work in practice.

That pilot has now generated a significant body of evidence. While it has answered some narrow technical questions, it has not resolved more fundamental ones about whether these checks are reliable, proportionate or even workable in the real world.

No-one in the regulated betting and gaming industry wants customers in genuine financial difficulty to go unidentified or unsupported. The Betting and Gaming Council and our members have invested heavily in safer gambling measures, customer interaction systems and compliance processes designed to spot risk and intervene early.

The real question is not whether vulnerable consumers should be protected. It is whether these proposed financial risk assessments are the right tool to achieve that aim. That is where serious doubts remain.

The Gambling Commission has sought to give reassurance that it is still reviewing the evidence, and that any assessments would need to be “frictionless” and workable for the overwhelming majority of customers.

But its definition of “frictionless” is too narrow and does not reflect the reality of the customer experience.

A check is not frictionless simply because a customer is not asked to upload a document at the moment the assessment is run. What matters is the full customer journey and the consequences that flow from the assessment. If a customer is flagged on the basis of inconsistent or incomplete data, the operator must then decide what action to take. In practice, that is where friction appears: further questions, requests for evidence, restrictions or interventions that affect the customer experience in a very real way. That is not a theoretical concern. It is the central practical issue raised by operators throughout this debate.

The idea that there would be “no need” for document checks following a financial risk assessment assumes that operators can place confidence in the data being returned. The pilot evidence, and the experience of operators involved, points in the opposite direction.

One of the most significant concerns is the inconsistency of outcomes between credit reference agencies. The same customer can appear very differently depending on which dataset or methodology is used. If the underlying results are not sufficiently consistent, operators are left in an impossible position: expected to take decisions that could materially affect customers, while lacking confidence that the data gives a dependable picture of genuine financial risk.

That matters because once trust in the score falls away, the supposed “frictionless” model begins to unravel. If an operator cannot rely on the output, the pressure to seek corroboration grows. That means more customers being asked for personal financial documents, even though the overwhelming majority do not want to provide them. It also means a greater risk of inconsistent outcomes across the market, where one customer may be treated differently by different firms depending on which agency or model sits behind the assessment. That is not consistency. It is regulatory uncertainty for businesses and consumer uncertainty for customers.

Good regulation should build on evidence, not assumption. It should ask whether an additional layer of checks is genuinely needed before imposing it. Where standards have improved to the point that operators already have a clear and up-to-date picture of a customer’s financial risk, introducing financial risk assessments risks duplicating information that is already known.

Regulation is at its best when it is targeted, proportionate and demonstrably effective in practice. It is at its weakest when new rules are added because they sound compelling in theory, even though the practical case remains unsettled.

There is another reason caution is needed.

If customers experience these checks, evidence shows that the majority will not comply. A recent YouGov poll for the Betting and Gaming Council found that 65 per cent of bettors would be unwilling to provide personal documents such as bank statements or payslips in order to continue betting.

That matters, because behaviour will change. Faced with intrusive or inconsistent checks, a significant number of customers will not engage with them at all; they will simply go elsewhere.

And in a market where illegal online gambling is rapidly growing, policymakers cannot afford to dismiss that risk. The black market offers none of the protections, safeguards or oversight that exist in the regulated sector. Any policy that nudges consumers in that direction would be counterproductive for consumers, damaging for legitimate businesses and costly for the Treasury.

None of this is to argue against consumer protection. Quite the opposite. The industry supports robust safeguards, and where customers are genuinely in financial distress, intervention matters. But those interventions already take place.

The Gambling Commission acknowledges differences in credit reference agency data and suggests these can be managed over time. It has also indicated that further evaluation will be published alongside decisions on next steps. That is welcome, but it reinforces the case for re-evaluation rather than immediate progression. If key questions are unresolved and further analysis is still to come, the responsible course is not to press ahead in the hope that guidance can address the gaps. It is to fully and transparently evaluate the pilot, and then determine whether these checks are justified at all.

This should not be framed as a choice between inaction and implementation. There is a more balanced approach: assess the effectiveness of the significant protections already introduced, publish the full pilot findings and consider the evidence openly before deciding whether any further intervention is necessary. That is what evidence-based regulation looks like.

The Betting and Gaming Council has consistently said that good regulation must be workable in practice, proportionate in design and effective in outcome. On the basis of what we know today, financial risk assessments do not yet pass that test.

Grainne Hurst is CEO of the Betting and Gaming Council

This piece was originally published in the Racing Post.