UKGC Withholds FCA Talks on Spreadex Failings
FOI reveals the UKGC and FCA discussed Spreadex's £1.36m penalty case, but details are being kept secret to protect regulatory methods.
A Freedom of Information request reveals the UK Gambling Commission and Financial Conduct Authority communicated about Spreadex's regulatory review, which led to a £1.36m fine. However, the UKGC is withholding the details of these talks to protect its investigative methods.
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A Freedom of Information (FOI) request has revealed that the UK Gambling Commission (UKGC) communicated with the Financial Conduct Authority (FCA) regarding the regulatory failings of Spreadex Limited, but is refusing to disclose the content of those discussions.
The FOI response, dated 17 December 2022, also confirmed that the UKGC’s investigation into Spreadex covered all aspects of its gambling licence, not just its casino operations.
Context: A Dual-Regulated Operator
This data is significant for consumers because Spreadex is a unique operator, regulated by both the UKGC for its gambling products and the FCA for its financial spread betting services. The £1.36 million penalty issued to Spreadex in August 2022 was for serious anti-money laundering (AML) and social responsibility failures.
The refusal to release communications between the two regulators means consumers remain uninformed about the level of collaboration and information sharing that occurred when a dual-regulated firm was found to have significant failings.
Breakdown of the FOI Response
The request, submitted on 4 December 2022, asked two key questions about the regulatory review that began in July 2021.
1. Scope of the Review
The UKGC confirmed its review was into Spreadex Ltd’s entire combined remote operating licence (000-008835-R-104580-017). This licence covers:
- General Betting Standard - Real Event
- General Betting Standard - Virtual Event
- Casino
This clarifies that although Spreadex voluntarily suspended its casino activities for five months during the investigation, the regulatory review encompassed its entire gambling offering, including sports and virtual betting.
2. Communications with the FCA
The Commission confirmed it holds a "small number of records" showing communications with the FCA regarding the Spreadex review. However, it has withheld these records in their entirety, citing Section 31 (Law Enforcement) of the FOIA.
The UKGC argued that disclosing these discussions would likely prejudice its ability to carry out its regulatory functions. It stated that releasing the information could:
- Lead non-compliant licensees to alter their behaviour to pass assessments.
- Expose assessment techniques and practices.
- Undermine the Commission's ability to uphold the licensing objectives.
In its public interest test, the UKGC acknowledged the need for transparency but concluded that the public interest was better served by withholding the documents to protect the integrity of its regulatory processes.
Significance for Consumers
The response provides two key takeaways for consumers. Firstly, it confirms the regulatory action against Spreadex was comprehensive and not limited to the casino product it temporarily suspended. Secondly, it highlights a lack of transparency around how the UK's top financial and gambling regulators coordinate on consumer protection issues involving dually-licensed firms.
While the UKGC has provided a legal justification for withholding the information, it leaves a gap in public understanding of how cross-regulatory risks are managed when an operator like Spreadex fails to meet its obligations.