British Gambling Industry in the News — Weekly Round-up for January 12, 2018

By Brian Cullingworth, Last updated Jan 12, 2018

UK Financial Regulator Has Concerns Regarding Financial Spread Betting

Communicates with operators, warning “pay due regard to the interests of customers and treat them fairly”

Britain’s Financial Conduct Authority has expressed “serious concerns” regarding financial spread betting in the CFD (contracts for difference) sector, warning operators to ensure they “pay due regard to the interests of customers and treat them fairly”.

In a statement Wednesday following its review of the sector, the FCA said it had sent a letter to all providers and distributors of these products cautioning them regarding the treatment of clients.

Shares in CMC Markets, IG Group and Plus500 fell by more than 7 percent on the announcement, with IG Group the biggest percentage loser.

“We believe there is a high risk that firms across the sector are not meeting our rules and expectations when providing and distributing CFDs. As a result, consumers may be at serious risk of harm from poor practices in this sector,” the FCA said.

The Reuters news agency reports that the sector is regulated by European Union rules which have no caps on leverage. That means investors can take out bets that are far larger than their initial outlay, offering greater potential returns but also running the risk of huge losses.

The European Securities and Markets Authority last month said it was considering restricting the marketing, distribution or sale to retail clients of CFD products.

Among its concerns, the FCA listed the manner in which CFD products were marketed to retail customers; it identified flawed due diligence processes, conflicts of interest and poor remuneration practices. In one case a CFD provider’s arrangements were so poor that the financial watchdog is to take further action.

The majority of retail customers who bought CFD products on either an advisory or discretionary basis lost money, the FCA said after it reviewed 34 firms over a 12 month period.

The FCA advised operators to define their target market precisely; consider how they communicate with clients, and improve due diligence around taking on new distributors.

The regulator said many firms failed to provide satisfactory evidence that they complied with the FCA’s remuneration code, with some paying staff on a 100 percent variable basis. It also said companies were not properly managing conflicts of interest, such as CEOs also managing compliance requirements

The FCA raised similar concerns last year (see previous InfoPowa reports).

The spread betting firms named have not thus far responded to the FCA statement.

UK Gambling Commission Shows Its Teeth Again

17 operators under scrutiny for AML and Responsible Gambling failings…and five could be at risk of losing licenses

Ending the week on a threatening note Friday, the UK Gambling Commission issued a statement advising that it is investigating 17 of its licensed operators for “failings” in anti-money laundering and responsible gambling policies, advising that five of these may have their licenses reviewed.

The Commission does not name any of the operators, but the warning will likely send tremors through the UK licensed list, representing another example of the Commission’s more aggressive approach to regulation (see previous InfoPowa reports).

The decision to investigate comes after the Commission conducted a review of its operators to assess their compliance with licensing obligations.

In a letter to all operators, CEO Sarah Harrison commented:

“It is vital that the gambling industry takes its duty to protect consumers and keep crime out of gambling seriously. The Gambling Commission’s new strategy sets out our vision for a fairer and safer gambling market.

“The action we are taking to examine online casino operators’ compliance with money laundering and customer interaction requirements is just one example of how we will be relentless in turning that vision into reality.”

Harrison noted that the online sector now accounts for a third of British gambling, necessitating a wider ranging review of online gambling and looking at how the market has evolved in order to identify where further action can be taken to make gambling fairer and safer for consumers.

New Head of D.C.M.S. Appointed In UK Cabinet Re-Shuffle

Matt Hancock knows his way around the gambling industry, say observers

British Prime Minister Theresa May’s cabinet re-shuffle this week offers a better understanding of the gambling industry following the appointment of West Suffolk MP Matt Hancock (39) as Secretary of State for Digital, Culture, Media and Sport (DCMS).

The appointment has been generally perceived as good news; Hancock is respected as a politician who has taken the time to study the industry, and in the past has been active in proposing new laws such as the Offshore Gambling Bill dealing with the horse race betting levy. His constituency includes the Newmarket racecourse, and he has been supportive of UK racing in parliamentary debates as a junior minister.

Hancock has served DCMS as Minister of Digital & Culture since 2016 and will replace Karen Bradley as leader of the department.

He will be a busy man as the DCMS completes the reform of the current levy system and the ultra-sensitive FOBT maximum bet issues, along with a host of other retail and online gambling activity and oversight of the UK Gambling Commission.

Tracey Crouch, the Minister of Sports and Civil Society, will reportedly work closely with Hancock on sports development and funding.

Brian Cullingworth

Infopowa news was a staple of Casinomeister’s news from 2000 until 2019. Brian Cullingworth was the main writer, contributor, and was one of the most knowledgeable persons I have ever known involved in the online casino industry.

We first met in January 2001 at the ICE in London where I observed him going booth to booth interviewing online casino, software, and licensing jurisdiction representatives. Brian was also heavily involved with our forum as “Jetset“, he was involved as an informal consultant to eCOGRA, the OPA, and was a player advocate who assisted countless aggrieved players with his connections to industry folks. He also published “Casino Cautions” via Infopowa news for quite a number of years. These can be found in our news archives.

His passing in February 2019 was a dark day for us. He will be forever missed.

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