UKGC Criticised in 193-Page Football Index Review
The UK Government has severely criticised the gambling sector’s regulator over their handling of Football Index. The UK Gambling Commission is accused of failing to act when problems were identified with the football share trading platform.
A government-ordered review into the collapse of Football Index is highly critical of the Gambling Commission’s role in the company’s demise. In a lengthy review, QC Malcolm Sheehan stated the regulator responded slowly and was guilty of inaction after financial issues with the company became known.
Boris Johnson’s government launched a review in April to assess the regulator’s actions from September 2015 until the decision was made to remove BetIndex’s licence, the parent company of Football Index, in March this year.
In terms of regulation, Sheehan’s report reached three clear conclusions:
- BetIndex did not communicate its operating model with the regulator and failed to disclose various important changes with its product after launch, violating its licencing conditions.
- As BetIndex was offering a novel gambling product, the UKGC should have been aware of the challenges of regulating a new product. As a result, the regulator should have employed a higher degree of scrutiny, made quicker decisions, and used the escalation process when areas of concern were identified.
- Although Football Index was never regulated by the Financial Conduct Authority (FCA) as the product was classed as a gambling product rather than an investment, the FCA was criticised for the length of time to respond to UKGC’s queries. Sheehan also highlighted inconsistencies with ts messaging over regulatory responsibilities.
The report gives an interesting insight into the handling of the Football Index. It shows that the UKGC was somewhat a reluctant regulator for the company and wanted the FCA to take over the regulatory oversight of the investigation due to the unique nature of the company’s operating model.
However, the FCA was adamant that the business did not fall under their remit and was reluctant to become involved. The report stated that despite the FCA’s refusal, the UKGC continued to seek further correspondence from the FCA, delaying the investigation into Football Index by almost a year.
As a result of the report, the two bodies have worked together and strengthened the existing Memorandum of Understanding (MOU). New processes now include improved escalation routes that they believe will eradicate the delays seen in this case.
The Gambling Commission also state they have updated its risk assessment framework, meaning new products to market would be properly considered. The regulator has also promised consultation on tightening the rules for the terminology used when describing gambling products.
The regulator received many complaints that Football Index was advertised more as an investment opportunity, with the brand comparing its product to the stock market in its marketing campaigns.
The FCA will also nominate an executive director to oversee its relationship with the UKGC.
The interim CEO of the UKGC, Andrew Rhodes, said of the report: “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,”
“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.” Added Rhodes.
When the UKGC suspended BetIndex’s licence on 11 March 2021, 278,585 people had accounts with the company. The company had suspended trading on its platform, meaning customers couldn’t trade the shares owned or access funds. The value of these open bets was £124,264,610.27.
Malcolm Sheehan’s review can be read in full via the UK Government’s website.