Financial risk assessments pilot – update on Stage two
Our Director of Major Policy Projects and Evaluation Helen Rhodes provides a further update on the ongoing pilot of financial risk assessments.
Posted 21 May 2025 by Helen Rhodes
In this blog, we provide a further update about Stage two of the financial risk pilot, following our update on Stage one back in February.
Stage two’s findings provided more data on the potential for frictionless assessments and the findings are positive in relation to how frictionless the process could be.
The pilot assessment is still ongoing. The Stage three and post-Stage three analysis period, running into the summer period, will give us more findings in relation to unnecessary inconsistency between credit reference agencies and on how risk assessments could target the most severe financial risk. It will help us consider how operators could embed financial risk assessments in their customer interaction processes.
Background
Financial risk assessments are a proposed way of identifying high-spending remote gambling customers who may be in financial difficulties, in order to help support them. This is not just another way of saying “affordability checks” - we do not have any regulatory requirements for affordability checks and are not proposing any. Financial risk assessments would be a much more targeted way of identifying customers who are in current significant or imminently worsening financial difficulties by flagging customers who are for example in significant or multiple arrears, defaults or bankruptcy.
Over time, this way of identifying vulnerable people could be used to support these customers and prevent some of the very serious cases we have seen where customers have been able to gamble large amounts without any checks or support being in place.
The pilot is a means of proceeding cautiously as set out in our consultation response, testing whether - and how - financial risk assessments could be introduced in a way that supports high-spending customers in financial difficulties but also supports a frictionless customer journey for the vast majority of customers.
Financial risk assessments would not affect a customer’s credit score if they were introduced in the future.
NatCen is continuing to work as our evaluation partner to support this work.
The pilot’s overall approach
The pilot is not a ‘live test’ and no consumers have been affected. The pilot involves a group of the largest remote operators and commenced in September 2024. It is taking place in three stages, plus an analysis phase running into the summer period. Reporting and assessment of the full findings, alongside other data and evidence will follow.
The purpose of the pilot as set out in the Commission’s consultation response – to understand whether and how financial risk assessments can ’support a smooth customer journey and avoid seeking documentation from customers where that is not necessary. The pilot is exploring four set success criteria. The first two of these are traditional “success criteria” but the others are not binary pass/fail questions. For example, we are exploring whether the data can be meaningful for consideration of risk - the Commission will be applying its regulatory judgement and expertise in making an assessment of this “success criteria”. The success criteria and key questions for exploration are set out below:
Frictionless part one: What proportion of those high-spending customers checked could get a frictionless financial risk assessment if they were introduced? If the thresholds were set at those proposed in the consultation, this would mean that approximately 3 percent of accounts would be checked. We are testing whether 80 percent or more of that small proportion being checked would be frictionless.
Frictionless part two: How quickly could credit reference agencies return a financial risk assessment? Can credit reference agencies return the score or RAG rating to gambling operator within minutes for matched customers?
Data relevance and accuracy: Is using credit reference data meaningful for understanding of an individual customer’s current or imminent overall financial risk and financial vulnerability? Following completion of Stages one and two of the pilot, the Commission has extended this success criterion to further explore the issue of consistency and differences between credit reference agencies, analysis of which will continue in post-Stage three analysis. To what extent do the differences between credit reference agency outputs affect the consideration of data relevance and accuracy? To what extent are “false positive” and/or “false negative” flags of risk a concern?
Implementation issues: How could the data be presented to operators to help understand the level of financial risk or vulnerabilities associated with individual customers? How could operators build financial risk assessments into their overall customer interaction processes?
Our final decisions will also be informed by other evidence and data. This includes for example findings from our separate data request, what we know about gambling harms, and information about other forms of assessing financial risk, such as document checks.
Where are we now?
Stage two is complete and findings are available. Stage three has just come to an end and reporting is taking place. This will be followed by a post-Stage three analysis period allowing us to further assess issues that have been raised earlier in the pilot.
Stage one looked at a cohort of inactive customers, while Stage two looked at active customers.
Stages one and two both tested customer accounts which had - during a set historical period - met high-spending thresholds. The account details were shared with one or more credit reference agencies and they provided a financial risk assessment at the point the threshold was met. This means the pilot is testing what financial risk indicators were present when the account met the high spending threshold. As a result, the credit reference agencies are replicating the data returns to operators as close to automated or live implementation as possible.
These two stages primarily informed the first success criterion on the proportions of customers that might be able to receive a frictionless check. It also gave us some insights on data quality and understanding (success criterion 3) and implementation issues (success criterion 4).
The emerging findings from both Stage one and Stage two were used and are being used to inform our approaches on Stage three of the pilot and the post-pilot analysis approaches.
What did Stage two tell us?
In Stage two of the pilot, there were approximately 1.7 million financial risk assessments across the three credit reference agencies, in relation to approximately 860,000 accounts. This is an increased number of risk assessments compared to Stage one due to the design of Stage two, but this is not indicative of how many accounts might be assessed if the assessments were introduced in a live environment. You can read more about how thresholds could be set in our consultation response.
In Stage one, approximately 95 percent of assessments were possible in a frictionless manner, and for Stage two this increased to 97 percent which could be completed in a frictionless manner. The findings from Stage one and two are favourable, compared to the 80 percent which was estimated in the 2023 Government White Paper.
Approximately 3 percent of the assessments were not matched in this stage – this compares to 5 percent in Stage one of the pilot. Stage two of the pilot used a more recent period and this may have contributed to a reduction in the unmatched category as the operators’ data may have been more up to date. A frictionless assessment was not possible in these cases – this is favourable compared to the estimated 20 percent who would not have a frictionless assessment as set out in the 2023 Government White Paper.
More detail on the figures from Stage two
As referenced above, 97 percent of the approximately 1.7 million assessments resulted in a frictionless assessment in Stage two. Included in this category is the “thin file” rate. “Thin files” are where the customer could be identified but there was limited information and no adverse information. We consider these “thin files” to show no financial risk in the gambling context. This “thin file” rate stayed at approximately 3 percent of the assessments in both Stages one and two.
The range across the three credit reference agencies where the assessment could be conducted in a frictionless manner was 95.47 percent - 98.63 percent of assessments. It is noted that the different credit reference agencies were contracted to conduct different amounts of financial risk assessments in this Stage two of the pilot, so the figures from the credit reference agencies are not directly comparable to each other. Nonetheless it is helpful to see that all three credit reference agencies were conducting frictionless assessments at a minimum of 95.47 percent in this Stage.
As covered above, the percentage of unmatched assessments reduced from 5 percent in Stage one to 3 percent in Stage two.
It is important to note that that this is not 3 percent of accounts. Our consultation proposal originally estimated that only 3 percent of active accounts would receive an assessment if introduced - these would be the highest spending accounts. Only a very small proportion of active accounts would receive an assessment and be unable do so in a frictionless manner - the White Paper estimated approximately 0.6 percent of active accounts would receive an assessment but not be able to do so in a frictionless manner. We can apply the Stage two proportions to give a reasonable estimate of the proportion of active accounts that would be unable to receive a frictionless assessment at the consultation proposed thresholds. This would result in an estimated 0.1 percent of accounts that would both require an assessment and be unable to receive an assessment in a frictionless manner. In other words, based on these estimates, when considering the impact of the introduction of the consulted measure, an operator would only be unable to meet the requirements in a frictionless way for 1 customer in every 1,000 accounts.
This is encouraging about the ability of assessments to be conducted in a frictionless manner – one of the success criteria of the pilot, but not the only one.
Included in this category of unmatched is the “invalid rate”. We also saw a slight reduction in the invalid rate, where there may be issues in the operators’ data provided to credit reference agencies - such as data formatting issues, invalid data or duplications in the data provided to credit reference agencies by operators. This has been relatively low in both Stages one and two (less than 1 percent), but it reduced in Stage two. This may be because of the use of more recent data, or the operators were able to make changes to fix any data issues. This is also an encouraging finding in that operators can reduce the amount in this category with good data practices.
Customers under 25 years of age were more likely to be unmatched than those who were 25 and over.
Financial risk in the customer base for Stage two of the pilot
Alongside Stage two, we were able to gather information from credit reference agencies to help us understand the level of financial risk seen in relation to the customers in the pilot.
Two credit reference agencies shared data to indicate that the customers who met the thresholds for the pilot where they conducted assessments were more likely to have one of the direct risk flags on which operators are permitted to receive data in comparison to their separate wider UK populations. The results vary across operators with customers in the pilot cohort between twice and four times more likely to have a debt management plan and between twice and five times more likely to have a default in the last 12 months than the type of consumer in their comparison UK populations. A default is when a provider considers that the debtor will not ever repay the debt.
NatCen is continuing to work as our evaluation partner on this pilot and post-pilot analysis work.
What else did Stage two tell us?
Credit reference agencies have unique systems – some credit reference agencies make use of data from some sectors which other credit reference agencies do not. They also have their own rating systems categorising risk and different ways of presenting the findings back to the pilot participants. It is expected that the credit reference agencies would have their unique systems. However, operators continued to see differing results from different credit reference agencies without as yet sufficient information to understand the reasons why there might be differing results. This will be a key focus for the post-Stage three analysis phase.
It is normal for there to be variation between credit reference agencies. However, as before, we continue to think that more can be done to support operator understanding of these different systems and indeed to allow credit reference agencies to make refinements to their gambling-specific models to reduce any unnecessary variation or confusion, before any implementation should this be introduced. However, the role of regulating the credit reference system is for the FCA which has an ongoing programme of work on credit reference governance, mandatory reporting and other measures which will continue to deliver improvements in consistency of credit reference data.
Our work will also further support operators in considering how they could embed the financial risk assessment approach into their wider customer interaction approaches.
What happens next?
These further findings from the pilot have helped us understand the extent that assessments could be conducted in a frictionless manner, which is an important success criteria for the pilot, but not the only one.
Building on our staged approach to the pilot, we are now further exploring data consistency across credit reference agencies, as well as exploring options to focus identification through financial risk assessments of the most severe financial difficulties.
We will also continue work to support operators to consider how they could support these customers. Financial risk assessments are not designed to be acted on in isolation, as that would fail to balance the financial risk alongside everything else that is known about the customer.
Data-sharing for Stage three of the pilot completed on 30 April, and the Commission has moved to an analysis phase which will run into the summer period.