Government Orders Independent Football Index Review
The UK government has ordered an independent review into the now-defunct Football Index. Findings of the report will be published in the summer.
Boris Johnson’s government have announced they will launch an independent review into the circumstances that led to the collapse of Football Index. Minister for Gambling and Lotteries John Whittingdale has confirmed that an independent expert, who is yet to be appointed, will lead the review.
The report’s findings are expected by the summer, and the government has said they will be used as evidence in the review of the current gambling legislation. The UK Gambling Commission is conducting a review of the 2005 Gambling Act, and proposals for change are expected by the end of this year.
Football Index was a football-themed share trading platform that enabled customers to buy shares in Premier League players, and the customer would receive dividends based on a player’s performance. The share price could also rise or fall depending on the publicity surrounding a player. However, the company went into administration, and £90m worth of customer’s funds still haven’t been repaid.
A group of more than 40 MPs, covering the whole political spectrum, demanded a public inquiry into Football Index and the Gambling Commission’s role in failing to protect customer’s funds before the company’s demise.
In a letter to Boris Johnson, the Gambling Related Harm All Party Parliamentary Group (APPG) blamed the regulator for not taking action, even though the regulator was aware of issues as early as January 2020.
The letter stated: “From the evidence, it appears as though the Gambling Commission licensed what became a pyramid scheme, was subsequently warned that it had become a pyramid scheme, but by negligence or design allowed Football Index to overstate its financial position, reassuring its users to attract more investment and new money into the platform,”
The APPG question why there was a four-month delay before the Commission took action and claimed that the UKGC was aware that when the company positioned its product as a stock market, it created a false impression of security for customers.
“Football Index were essentially operating a ‘fraction reserve banking’ system where only a portion of users’ money and overall ‘Market Cap’ was available to withdraw at any one time,” the letter stated.
“Such a platform should arguably have been subject to liquidity controls and capital ratios, which regulation by the Gambling Commission did not require.
“As a result, Football Index was fatally and financially reliant on user growth to not only avoid insolvency but to avoid its own customers losing what has been estimated as being £90m of their own money.”
In response to the review, a UKGC spokesperson said: “We strongly welcome the government’s independent review into the regulation of Football Index and the focus it will bring on the way that complex products, which to consumers can have the appearance of both gambling and financial characteristics, are currently regulated.
“Alongside other regulators, we look forward to fully engaging with the review. Our own regulatory investigation is continuing and will not be adversely impacted by the review.”
The Minister for Gambling and Lotteries Whittingdale, who took over the role at the beginning of March, said he understood how difficult it was for customers of Football Index who had lost “significant amounts of money”.
Whittingdale said the gambling landscape is evolving rapidly and that the government would ensure changes to the 2005 Gambling Act would ensure that new regulation is fit for the modern age.