Gambling financial risk assessments are good – but banks have a role to play too

Here at Money and Mental Health our Gambling Harms Action Lab has been working with seven current account providers to develop new or improved solutions to support customers at risk of or experiencing gambling harm.

With an announcement from the Gambling Commission last week around financial risk checks for gambling operators, we took a look at what this means and the role that banks can play in further reducing this harm. 

Gambling related financial harm has been in the news. The Gambling Commission, the organisation responsible for regulating the UK gambling industry, has announced financial risk assessments for gambling operators to identify when people may be experiencing gambling related financial harm. 

The checks will be rolled out via a staged approach. The first phase will see gambling operators asked to intervene where someone exceeds a £5,000 net deposit threshold in 24 hours, but it will soon move to a system where checks will be required for a £1,000 net deposit in 24 hours or £3,000 in a rolling 90-day period. The thresholds are to be set lower for under 25s, who experience gambling harm at a higher rate. 

Let’s be clear: any meaningful action to reduce the risk of gambling harm is welcome. But considering the work we’ve done in this area – we’d like to see these thresholds lowered even further. Let’s investigate why, and the role that banks can play in bridging this gap.

Current account providers are not regulated by the Gambling Commission, instead they’re required to meet regulations as set out by the Financial Conduct Authority. The introduction of the Consumer Duty in 2023 requires firms to act to deliver good consumer outcomes when using their products and expects them to take reasonable steps to prevent foreseeable harm.

When considering customers at risk of or experiencing gambling harm, banks and building societies have a unique opportunity to utilise the information at their disposal, including a more holistic view of a customers gambling spending, behaviour and affordability. This supersedes the thresholds set by the Gambling Commission and means banks should seek to intervene with non-judgemental communications detailing support available at lower levels in many cases. Discussion of the thresholds announced can help to uncover why.

Allowing customers to lose up to £3,000 in a rolling 90-day period before checks are introduced means that it will be possible for many people to carry on gambling with no impact to their regular gambling spend at all. This is despite evidence that many people gambling under £1,000 a month are likely to be experiencing gambling harm. 

In First line of defence, we investigated the concept of setting spending and behavioural thresholds for banks to proactively identify and offer support to customers who may be experiencing harm. We also discussed the importance of considering affordability as part of any transaction data analysis model.

This is something that is missing from a blunt monetary value threshold. Banks have an opportunity to support customers to understand their gambling spending and behaviour in the context of their wider financial position and affordability – which in many cases will mean communicating with customers at a point below the thresholds for operators. 

There are also alternative schools of thought that should be considered here – such as the internationally recognised Lower Risk Gambling Guidelines – which call for no more than 1% of household income to be spent on gambling. For the average gross monthly salary in the UK of £2,886 this would be £29 per month. There is a substantial gap between the £87 per 90 days this adds up to compared to the Gambling Commission’s thresholds for checks.

The Gambling Commission’s announcement includes a specific recommendation for checks where someone reaches a net deposit of more than £1,000 in a 24-hour period. This is an acknowledgement of a behavioural form of gambling harm – where someone may be chasing losses. However, there are other behaviours that can indicate harm not covered that banks can support customers with.

For instance: gambling late at night can be a sign that someone may be experiencing gambling harm. Banks are able to see when someone is repeatedly depositing money to a gambling operator throughout the night and respond with an offer of support and information around existing tools and external support services. 

Equally, banks can also see where deposits to gambling operators escalate in value over a short period of time – which is another indication of potential ‘chasing losses’ that can occur at a threshold far below £1,000 in a day. 

This, alongside a more holistic view of customers’ financial circumstances means that banks can and should consider when people need in the moment messages of support.

The introduction of financial risk assessments is a positive step for the gambling industry. However, banks and building societies also have a role to play in preventing gambling harms and should continue their work in this area to ensure they meet their obligations to support customers who need help.

Many people will continue to experience harm under the new rules: current account providers are strongly placed to deliver meaningful action that will go some way to combating this harm.