UK-licensed companies must reveal fund protection rating by February

UK-licensed companies must reveal fund protection rating by February

Thursday, November 20, 2014 Totally Gaming

The UK Gambling Commission (UKGC) has revealed that helping customers decide where to deposit funds is the main reason behind a new scheme that requires UK-licensed companies to reveal their fund protection rating to customers, a spokesperson from the regulatory body told TotallyGaming.com.

The three-tiered rating system, which was proposed earlier this year, will provide UK online gaming consumers with further information regarding operator player fund protection, payment processing and operator fund terms. UK-licensed companies must include their Basic, Medium or High rating on their terms and conditions page by December 31.

From February 2, all operators will be required to display their fund rating to all depositing customers. UK consumers will then have to acknowledge the operators' rating in order to proceed with their transaction.

“Our Protection of Customer Funds webpage for consumers explains that there is no guarantee that customers will get all of their money back if an operator goes bust, and that there are varying levels of protection in place to protect customer funds," A UKGC spokesperson told TotallyGaming.com.

The ‘Basic - Segregation of customer funds’ rating is the lowest form of protection. Customer funds are kept in accounts separate from business accounts but they would form part of the assets of the business in the event of insolvency.

The ‘Medium - Quistclose or equivalent’ rating means that customer funds are kept in accounts separate from business accounts; and arrangements have been made to ensure assets in the customer accounts are distributed to customers in the event of insolvency.

Finally, the ‘High - Independent trust account’ rating means that customer funds are held in a trust account which is verified and subject to controls by an independent trustee.

The rating system was introduced as part of the UKGC's response to the three separate consultations on proposed amendments to licence conditions and codes of practice (LCCP) which were carried out from September 2013 to April 2014. In a report published in April, the Gambling Commission ruled that licensed companies must segregate customer funds from regular company accounts.

Until now the Gambling Commission has taken a ‘buyer beware’ approach for all forms of funds held with operators, and has placed no specific burden on operators to protect customer funds in the event of insolvency. 

However, it decided to act, according to the report because “there have, in recent years, been some individual and high-profile cases where customer funds were put at risk by problems at or the collapse of a remote gambling company. In some of these cases, customer funds have been lost or significantly delayed and have only been reinstated some time later”.

The consultation found that “respondents agreed that these high-profile cases had demonstrated the incorrect assumptions customers had been making about the extent to which their money might be protected if things went wrong”.

The list of written respondents to the consultation included Betfair Rank Group and William Hill, as well as the Remote Gambling Association and Bingo Association.

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