UKGC highlights lack of ‘means to replace funds’ as reason behind Football Index downfall
Andrew Rhodes, Interim CEO of the UK Gambling Commission (UKGC), has issued a full response to a number of questions asked of the regulator by former customers of football player exchange platform Football Index.
Addressing customers, Rhodes stated that Football Index had ‘non-compliance issues and practices’ which needed to be addressed, but added that these circumstances were ‘not severe enough’ that the UKGC felt the need to put an end to the company’s operations.
However, he did acknowledge that BetIndex failed to notify the Commission regarding a number of changes to its financial position in 2020, highlighting the company’s inability to replace rapidly spent finances as a core reason behind its collapse.
Football Index, the UKGC detailed, ‘went from holding significant cash reserves to meet its liabilities to voluntarily doubling its liabilities to customers without any means to replace those funds, beyond attracting new customers’.
As the operator struggled to acquire new customers during 2020 due to football being suspended, it made the decision to hold one-months worth of cash to meet liabilities, money which was subsequently quickly spent and not replaced, leading to its decline.
Despite noting Football Index’s own failings, Rhodes did also agree with the findings of the government’s Independent Review into the matter that the UKGC ‘should have drawn a line’ under earlier efforts to ‘find protections and interventions’ on behalf of BetIndex customers after learning of the enterprise’s financial position.
A major criticism of the UKGC’s conduct prior to and during the collapse of Football Index revolved around accusations that the body should have acted earlier, with a letter sent to The Guardian a year prior comparing the company’s operations to that of a pyramid scheme.
Defending the UKGC’s decision not to suspend BetIndex’s licence in 2018, 2019 or 2020, Rhodes argued that this would have led to the firm’s customers to ‘lose significant amounts of money’ due to being locked into open shares.
“We were always conscious that any steps we took could negatively impact on consumers already active on the platform and create a ‘cash run’”, Rhodes explained. “Our focus therefore was doing what we considered was best for consumers.
“The Commission was able to secure improvements in compliance from BetIndex but at that time, there were insufficient financial grounds on which to suspend the licence.”
The compliance issues referenced did not concern BetIndex’s financial viability, Rhodes noted, but instead related to safer gambling controls, product promotion and terms and conditions, although he added: “To be clear, these were serious failings and in no way acceptable.”
The Chief Executive concluded: “While I was not Chief Executive or employed by the Commission when BetIndex collapsed, the level of contact I received when my appointment was announced left me in no doubt of its importance, and it has been a significant part of where I have spent my time since joining the Commission in June of this year.
“As Accounting Officer, I take responsibility for the Commission and the actions we take as a result of what happened and there are many things we already do differently and there are things that will form part of our advice in response to the Gambling Act Review.
“I hope that what I have set out does provide some insight and clarity into what happened and what the Commission can and cannot do as a result.”
The CEO also reiterated the new measures introduced by the UKGC in the aftermath of the Independent Review, including the categorisation of some betting offerings as ‘novel products’ in order to ‘ensure we hold ourselves to account in an ever-changing environment’, as well as commitment to deeper collaboration with the Financial Conduct Authority (FCA).
Source : /sbcnews.co.uk