The financial risk assessment pilot is concluding in a regulatory and economic environment that looks nothing like the one in which it was conceived. In a market under simultaneous pressure from tax, compliance requirements, and black market growth, policymakers should consider whether rolling out a controversial new compliance obligation at this point would be a misstep.
The FRA pilot
Since August 2024, the UK Gambling Commission has been undertaking a pilot of the 'financial risk assessment' (FRA) scheme originally proposed during the lengthy build up to the government's 2023 White Paper. If rolled out in their current form, FRAs would require licensees to consider an in-scope customer's financial position in more detail through obtaining data from credit reference agencies. Understandably, the industry's view is that these are affordability checks in all but name. The idea is that such checks would be quick and frictionless, carried out entirely in the background without the need to request information from the customer.
However, it has been reported that the pilot has hit a number of hurdles. The BGC has stated that the pilot has not been able to resolve questions about whether FRAs are "reliable, proportionate or even workable", and there are doubts around the consistency of data from credit reference agencies and the ability to ensure frictionless checks for the majority of customers. The Commission has also given very limited indication of what it expects from operators when FRAs show potential vulnerability, or where the check does not provide adequate information for an assessment to be made.
Notwithstanding this, the Commission has indicated that it will shortly announce its decision on whether to implement FRAs as a licence condition for all remote operators, seemingly without further consultation or analysis.
A policy conceived in a different regulatory environment
The idea of FRAs was conceived at a time when Remote Gaming Duty stood at 21%, and the broader reform pipeline was still being assembled. It reflected a market that, while under scrutiny, was not contending with the structural pressures it faces today or the changes to compliance requirements that have steadily built up over recent years, especially since 2023.
Since 2023, the Commission and DCMS have embarked on a period of significant reform to gambling regulation. Among the most significant of these reforms include:
- August 2024: financial vulnerability checks
- January 2025: numerous changes to the RTS for online games design
- April 2025: new statutory levy and online slots stake limits
- May 2025: new restrictions on direct marketing
- January 2026: mixed product promotion ban and restrictions on bonus wagering requirements
Unsurprisingly, these changes (which build on the revised Customer Interaction regime implemented in 2022) have either added significant compliance obligations to an already long list, or restricted licensees' operational or promotional activities, or both. The impact is threefold: one, an increase to the compliance burden on licensees (and the need for compliance resource); two, an inevitable impact on licensees' bottom line; and three, a significantly more protective regulatory environment for consumers.
The significant shift to the macro-economic climate also cannot be ignored. In 2026, Remote Gaming Duty has nearly doubled to 40%. This has caused a fundamental shift in the economics of the licensed sector which has been well recorded in the industry press. The statutory levy has also been introduced at a rate of 1.1% for most of the remote sector, and increased licence fees are expected to come into effect in October 2026.
The White Paper estimated that the impact of 'Financial Risk Checks' would be to reduce industry GGY by between £380 million and £710 million. This estimate was produced in a very different regulatory and economic climate, and the real financial impact of further layers of regulation may now be materially different. This must be a key consideration in deciding whether the introduction of FRAs is proportionate in the current climate.
The case for reassessment
Consumer protection measures are far more robust than they were when FRAs were first mooted (not least through the introduction of Financial Vulnerability Checks, online slot limits, and the significantly more intrusive Customer Interaction regime). Meanwhile, economic pressures on licensed operators have grown significantly. The Commission has not carried out (or at least has not published) any analysis of the cumulative impact of changes to the sector over the last three (and more) years, nor whether further changes are necessary or proportionate in the new regulatory and economic environment in which the sector finds itself.
The Commission must ensure that the implementation of FRAs is not only necessary and proportionate, but also that they do not have the unintended impact of causing regulatory uncertainty, inconsistency, and friction in customer journeys. Good regulatory practice demands that such problems as have arisen during the pilot should at the very least be subject to further analysis so that acceptable solutions can be found before they are imposed on the industry.
It is also critical to consider the potential impact on the black market. The Commission has a renewed focus on tackling illegal gambling in the UK, and for good reason, with 'non Gamstop' and other unlicensed operators becoming increasingly prevalent and accessible to consumers in the UK. Increasing compliance requirements along with the increased tax and other costs to licensed operators only serve to help the black market by restricting the ability of licensed operators to promote their products, and their ability to ensure an enjoyable customer journey. Any measure that has the potential to further inhibit the competitiveness (indeed, viability) of the licensed sector should therefore be subject to significant scrutiny by policy makers.
In his speech at the BGC AGM in February, Tim Miller emphasised the importance of allowing all the changes arising from the White Paper to 'bed in', and the need for a period of regulatory stability. Few could disagree with that. Unfortunately, however, recent indications suggest the Commission may be determined to push on with the implementation of FRAs regardless. We strongly suggest that such a pause is necessary now to give proper consideration to the cumulative impact of previous regulatory reforms, the changed economics of the gambling sector, and the potential impact of the FRAs, before the Commission embarks on this potentially significant own goal.