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Enforcement Action now going to Focus on PML Holders

Since the Gambling Act 2005 came in to effect on 1 September 2007 I have regularly commented on the style and approach of enforcement action taken by the Gambling Commission under the Gambling Act 2005. The first four or five years were not the most interesting of articles as it appeared little or no enforcement action was being taken, even in circumstances which quite clearly required some investigation or action.

There was undoubtedly a change of approach around 2011/2012 , since then we have seen numerous high profile investigations leading to major operators being the subject of public statements and making financial payments. Regulatory action has been commenced under Section 116 Gambling Act 2005 which permits the Commission to review an operating licence. The regulatory powers given to the Commission are set out in Section 117 and the ultimate sanction of revocation is dealt with in Section 119. I do not propose to go through the numerous cases which have been dealt with in the last four years but it is clear the vast majority of those cases relate to action being taken against the company who is the holder of the operating licence. What we have not seen (apart from in exceptional circumstances) is action being taken against individual Personal Management Licence Holders but it now appears from recent Gambling Commission publications that this is now being undertaken.

There has of course always been the power to deal with individuals who hold Personal Management Licences. Rob Burkitt from the Commission has quite rightly pointed out there always has been a power to take action against PML Holders, and those in senior positions, and that the Commission were always looking at taking the correct and appropriate action. Whilst Rob’s answer was of course completely correct it did not cover whether or not there had been a definite decision taken by the Commission in recent months to now take action against PML Holders and I doubt we will ever find out whether there was a round the table meeting when this decision was taken although I am in no doubt myself that this has happened. It seems to me inconceivable that in some of the high profile cases during the last four years no mention of any PML is made and yet in recent cases, which are clearly not on the same scale as others, the Commission are looking at taking action against PML Holders.

The Gambling Commission Statement of Principles for Licensing and Regulation March 2015 confirms at Paragraph 4.3 that the Commission expects those occupying senior positions whether or not they hold Personal Management Licences to:

  • uphold the licensing objectives and ensure compliance of operators with the LCCP
  • organise and control their affairs responsibly and effectively
  • have adequate systems and controls to keep gambling fair and safe
  • conduct their business with integrity
  • act with due care skill and diligence
  • maintain adequate financial resources
  • have due regard to the interest of customers and treat them fairly
  • have due regard to the information needs of customers and communicate with them in a way that is clear and not misleading and allows them to make an informed judgement about whether to gamble
  • manage conflicts of interest fairly
  • disclose to the Commission anything which the Commission would reasonably expect to know
  • work with the Commission in an open and co-operative way

A further Gambling Commission document “Licensing Compliance and Enforcement under the Gambling Act 2005: Policy Statement” March 2015 also deals with the Gambling Commission approach. At paragraph 5.3 “Where concerns have been raised about a licensee, the Commission may commence an investigation but it will not necessarily commence a licence review unless and until it appears likely that the Commission will need to exercise its formal powers under Section 117 of the Act”. In deciding whether enhanced compliance is required the Commission list a number of matters that they will take in to account and this list which is not exhausted includes: The nature and extent of the concerns, whether concerns have been raised about the licensee in the past, the extent of any attempt to conceal any failure, the impact on customers and the absence of internal controls and procedures.

Paragraph 5.19 sets out the procedure for reviewing an individual licence and makes it clear that before commencing a review of an individual personal licence the Commission must notify the licensee and inform him or her of the procedure to be followed in the conduct of the review. In most cases the Commission will fulfil this obligation by issuing a notice to the licensee which sets out: The ground floor commencing a review, the procedure to be followed, confirmation of the licensee’s right to make representations and when those representations should be made.

The powers have always been there to take action against Personal Management Licences. Having looked through the Gambling Commission website it does appear that, apart from the odd fairly exceptional case, the Commission has not taken action against Personal Management Licence Holders. It certainly does not appear to have taken any action against Personal Management Licence Holders for major companies and yet it now seems clear that this is to be the Commission approach. My personal view is such an approach needs to be handled with great care. Where there is criminality or serious and significant breaches of the LCCP or other matters then such an approach may be appropriate. Where a view has been taken that certain policies and procedures need updating and amending and there is no serious criminality / bad money being laundered / customers being defrauded then the Personal Management Licence review has to be a final step for the Commission.

The Commission should look to individuals to work with them and act on their advice or concerns and I have no doubt that the Commission will find the vast majority of PML Holders would only be pleased to do so. There are some excellent PML Holders in the UK with extensive knowledge of the industry and supporting legislation and guidance and to start a course of action which may impact upon a personal management licensee without serious and exceptional circumstances starts to set a dangerous precedent. The Commission should not forget that the imposition of conditions or even a warning on a Personal Management Licence will have a major impact on that individual and their ability to continue to work within the industry. No one questions that it is essential but the regulators in the industry should work together and the Commission should avoid Personal Management Licence reviews except in the most serious of cases.