Government slams slow response and inaction of UKGC in Football Index fiasco

A government review into the collapse of Football Index has criticised the Gambling Commission (UKGC) for failing to act quickly or decisively before the business fell into administration earlier this year.

The review was launched by the government in April to examine the actions taken by the regulator in the period from September 2015 up to the suspension of parent company BetIndex’s operating licence in March.

The review was led by ​​Malcolm Sheehan QC, who published his findings in a 193-page document on 22 September. The full 67,600-word report can be accessed here.

My first time putting in writing. £124m lost/stolen by #footballindex and £36,000 of that was mine.

Life hasn’t been the same since. I placed those bets because FI was a regulated gambling company. It became a Ponzi scheme under the watch of the UK Gambling Commission

— FootballIndexFight4Justice (@FootStockDave1) September 16, 2021

From a general perspective, the report reached three clear conclusions:

• BetIndex did not properly notify the UKGC of the nature of its operating model or of various important product changes after launch as it was required to do so
• The UKGC should have responded to the challenges posed by regulating a novel gambling product with earlier scrutiny, quicker decision making and better escalation of issues
• While Football Index was never regulated by the Financial Conduct Authority (FCA), areas of improvement for the FCA have been identified in regard to speed of response to requests from the UKGC and the consistency of its messaging over regulatory responsibilities

The report provides recommendations for both the UKGC and the FCA and it will provide further insight to help inform the government’s ongoing review of the Gambling Act 2005.

The report revealed the UKGC was eager for the FCA to take over some of the regulatory oversight of the investigation due to the operating model of Football Index.

However, the FCA said the business did not fall under its remit and appeared reluctant to engage, although this did not prevent the UKGC from seeking further correspondence for the best part of a year, further delaying its investigation into Football Index.

In light of the review, the UKGC and FCA have developed a strengthened Memorandum of Understanding (MOU) which includes new escalation routes to ensure that regulatory impasses are identified quickly and not beset by delays.

Additionally, the UKGC has updated its risk assessment framework so that new products are properly considered, as well as committing to consulting on tighter rules for the terminology used to describe gambling products.

This includes making clear distinctions for consumers where products are in fact gambling, rather than investments, after Football Index regularly compared itself to the stock market.

Finally, the FCA has nominated an executive director to oversee its relationship with the UKGC.

£81000 of my hard earned, life-savings stolen by #footballindex 81k worth of bets that were winning, bets that didn't lose, bets that weren't even voided, just simply bets were taken and the bookie kept the money. Mentally so draining having to deal with that every single day

— Gary footballindex robbed us (@gmnFI) September 15, 2021

Newly appointed UK Gambling Minister Chris Philp said: “I’m extremely conscious of how devastating the collapse of Football Index has been on its many customers, which is why we moved quickly to launch this independent review.

“We have been clear that we must learn lessons to make sure a situation like this does not happen again. I’m encouraged to see the UKGC and FCA are taking concrete steps on an action plan on how they will better work together.

“We will ensure that the findings from this review feed directly into our ongoing Gambling Act 2005 review, which is looking at ways we can improve regulation of the gambling industry,” he added.

UKGC CEO Andrew Rhodes said the regulator had already acted on a number of recommendations made in the report’s conclusion, such as more explicitly including novel products as one of the factors under consideration as part of assessing a UK-licensed gambling company’s risk factor.

He added that the new MOU between the UKGC and the FCA would allow previously “blurred lines” to be escalated and actioned more rapidly in future.

“No amount of explanation of what happened to Football Index will take away the justifiable hurt and anger its customers are experiencing having lost, in some cases, life-changing amounts of money when the gambling company collapsed,” said Rhodes.

“We accept and agree that we should have drawn a line under our efforts sooner, but this does not mean those customers would not have lost money in the event of the BetIndex company collapsing. Throughout this case we sought the best outcome for consumers within the scope of our regulatory powers.”

Former Food Standards Agency COO Rhodes was appointed UKGC CEO on an 18-month contract in June following the sudden exit of former boss Neil McArthur at the peak of the Football Index controversy.

He added: “In recent years we have seen an increase in the complexity of business models and product offerings. The lines between what is gambling and other types of products, such as financial services or computer games, has become increasingly blurred and no longer neatly fit into existing statutory definitions of gambling.

“Our actions were always focused on trying to protect consumers while we sought to bring the operator into compliance with regulations. This does not mean however that those customers would not have lost money in the event of the BetIndex company collapsing.”

More to follow…