Gambling Commission White Paper Consultations: Regulatory Panels

Background 

On 26 July 2023, the Gambling Commission (the “Commission”) published its first set of a consultations in response to the White Paper published by the government in April 2023 which set out a plan for reform of gambling regulation following the review of the Gambling Act 2005. 

This article focuses on the consultation on changes to the composition and decision-making processes of the Commission’s Regulatory Panels (“Panels”).

As it stands, as per Appendix 6 of the Corporate Governance Framework, Panels  currently comprise three Commissioners (though the quorum is two). The Chair of the Commission presides all Panels unless either (i) they designate another Commissioner to chair; or (ii) the Commissioners present elect a chair. Panels will normally also instruct a legal advisor who will be present and will provide any legal advice required.

Panels are convened where a case has been referred by Commission officials to the Panel, or where the licence applicant or holder wishes to request a hearing before a final decision is made after a ‘minded to’ letter has been sent to them setting out the preliminary conclusion. This is set out in the current guidance for licensing and regulatory hearings and matters before Panels tend to be considered in a hearing forum.

The Commission is proposing the following two changes to the composition and conduct of Panels:

• that Panels comprise a legally qualified Adjudicator (as chair), one Commissioner and one member of senior Commission staff, rather than two or three Commissioners; and
• that decisions by the Panel be paper-based as the default, moving away from hearings as standard. 

The Commission suggests that these changes have been proposed to (i) broaden the experience of the Panels, (ii) enhance governance and accountability by ensuring that decisions are taken at the appropriate level, (iii) increase flexibility to convene Panels and (iv) to reduce the costs and burden of oral hearings. 

There has always been something of an ambiguity about the true role of Panels at the Commission.  Are they intended to stand as a true appellate body to which complainants can bring cases and where they can expect an appropriate degree of independence from the original decision-makers.  Or are they really simply an extension of the Commission’s operational function, providing a degree of review of decisions but falling short of a proper appeal process.  Allied to this ambiguity is the extent to which Panel processes track legal or quasi-legal processes or whether they should be more informal.  These ambiguities are if anything exacerbated by the proposals.

It is true that an appeal can also be brought by complainants to the First Tier Tribunal, but the preparedness of the Tribunal to interfere with the decisions of regulators has proved very limited.  The Commission, in particular, has the ability to levy very substantial financial penalties on operators without having to take its case to any independent body.  For these reasons, a meaningful appellate process in front of the Panel appears sensible.

Proposal 1

The first proposal is to change the composition of the Panels from two or three Commissioners and a legal advisor to a legally qualified Adjudicator (as chair), one Commissioner and one member of senior Commission staff.

In this regard, there are a number of points to note:

1. The Commission explains in its Statement of Principles that decisions should be taken at the most appropriate level and that there will be a presumption in favour of decisions being made at the lowest appropriate level. Where the licence applicant or holder has not requested a hearing before a Panel in order to have the case reviewed prior to a final decision being given, the Commission will likely only refer the most complex decisions to the Panel. 
2. One of the key roles of the Panel is to “provide an escalation option which allows for a decision to be made by senior persons who are separate from the enforcement and/or licensing case team” as the Commission confirms in its consultation.
3. There a is right of appeal of any decision to the First-Tier Tribunal (Gambling), and the Commission has explained that “Panels are the final tier of the Commission’s internal decision-making processes, not an independent judicial process; the fully independent scrutiny of Panel decisions comes from the right of appeal to the First-tier Tribunal”.
4. The Commission and Panel have wide ranging powers to investigate, determine facts and decide on appropriate action. This includes imposing financial penalties with no limit on the extent of that penalty. The Commission’s Statement of principles for determining financial penalties confirms that the Gambling Act 2005 does not set a limit for a financial penalty, and “a penalty will be set at a level which the Commission considers to be proportionate to the breach”.  In contrast, by way of example, the Solicitors Regulation Authority is able to impose financial penalties only up to a certain limit and if it is determined that any penalty in excess of this limit should be awarded, the matter is referred to the Solicitors Disciplinary Tribunal.
5. The procedures and guidance for licensing and regulatory hearings explain that “decision makers must take care to avoid giving the impression that they are not independent  or impartial or that their decision making process is biased, or there is a risk of apparent bias”.  The guidance also explains that the members of the Panel should not have taken a firm view on the matter or give the appearance of having made up their mind before the formal consideration of an application.

In having three Commissioners, and an entirely independent legal advisor, the Commission appeared to be able at least to offer the appearance a reasonable degree of the impartiality by means of the Panel.  Under the proposed changes, in order to preserve the impartiality of the Panel and to alleviate any concerns regarding the same, the Commission proposes putting in place an Adjudicator Governance Framework which would be adopted to ensure appropriate safeguards are in place.  It is further explained that the Adjudicators will be employees of the Commission, but that steps will be taken to maintain a degree of separation between Adjudicators and other Commission employees. This will be impacted by the proposed changes.  

Whilst an Adjudicator Governance Framework is a helpful safeguard to put in place, the consultation makes no reference to similar safeguards for members of senior Commission staff, for whom it will certainly not be possible to separate entirely from their Commission colleagues. The Commission explains that on a case-by-case basis individuals will be excluded if they have had previous involvement in a particular case before the Panel, but as previously highlighted, this will not entirely prevent them from being influenced by the discussions of their colleagues, or being influenced their own preconceived views that will have been formed through their day to day role within the Commission.

Some concerns have also been expressed about the qualification level of the Adjudicator that the Commission proposes replace its current legal advisor with. Though the proposal might mean that Panels have a greater access to legal advice with the Adjudicator sitting on the Panel, the minimum level of qualification for Adjudicators is 5 years. This is likely significantly less experience than legal advisors used at present bring to the table and it is unclear whether Adjudicators will be required to have any particular sector experience.

Proposal 2

The second proposal is to introduce a presumption of paper-based decisions for the majority of issues that come to the Panel. The suggestion is that all decisions be made on the basis of written submissions, with the option for operators to request a hearing and the Panel considering the appropriateness of any such requests.  It would also be open to the Panel to decide themselves that a hearing is required. 

The Commission explains that it considers that such a change is necessary because of the time and expense of oral Panel hearings and also because hearings are typically quite formal with lengthy bundles, that make it stressful and difficult for unrepresented parties to navigate.  It is suggested that the change would make licensing and regulatory decisions more accessible for all licensees and applicants.

However, the move away from hearings would mean that complainants would lose the opportunity to put their cases at an oral hearing, usually considered to be an important safeguard in legal or quasi-legal processes. This is a real benefit of the Panel process and provides a forum for discussion and review, without the cost of having to appeal to the First-Tier Tribunal. The hearing process encourages a collaborative and discursive process, which would not flow from written submissions in the same way. 

The consultation provides limited insight into when the Panel might consider a hearing appropriate. It simply states that an oral hearing would be likely “where there were material and significant disputes of fact, or where a licensee is unable to effectively communicate their case in writing”. It has been suggested in the consultation that separate “decision-making guidance” will be produced that will set out the appropriate fairness test, but it has not been published as yet and it is unclear to what extent the Panel will consider hearings appropriate. It should also be noted that the time spent by the Panel in reviewing these requests and deciding whether or not an oral hearing should be approved based on the “fairness test” will be an additional burden on the Panel process. 

To make the process more straightforward to navigate, a more helpful change might be to set out some clearer guidance on the Panel process, explaining the procedural requirements and the expectations, such as in relation to documentation to the provided, statements from operators and written argument. This guidance is not currently available to operators and without it there is understandably some confusion, especially for unrepresented or unexperienced operators. We would encourage additional guidance whether or not there is a presumption of decisions without a hearing.

Impact on different types of Panel decision

It also appears to us that the suitability and appropriateness of the Commission’s proposed changes to Panels turn on the type of hearing before the Panel. The impact is likely to be more pronounced in the context of enforcement action decisions than licencing decisions.

For licensing decisions, the Panel has regard to the identity and ownership, finances, integrity, and competence of the applicant, whilst also considering the criminal record of the applicant, in order to determine whether the application should be granted or refused.  Such a process is more administrative in nature and in a lot of cases, is likely to be less contentious and more collaborative. This sort of process is likely to benefit from having a wide range of varying expertise on the Panel to assess and advise as to the suitability of the applicant. It might also be more straightforward for this type of process to be conducted on the papers, though that move will obviously be to the detriment of collaboration between the Commission and applicants.

In contrast, Panel decisions relating to enforcement action often result in huge financial penalties, or suspension or revocation licences, with significant consequences for businesses and personal management licence holders personally. The ramifications of this sort of hearing are far more pronounced and the suggestion of including a member of senior Commission staff on the Panel in that context is more concerning.  Members of Commission staff will regularly see similar cases in their day to day roles and will no doubt have formed their own predetermined view of what a bad operator is, which may flow (unavoidably and unconsciously) through to their decision making on any Panel, particularly if there are no safeguards to prevent such bias or any impact on the Adjudicator and Commissioner. 

Comment

We expect that the majority of operators will not be in favour of the changes proposed by the Commission in respect of the Panel process. The changes to the composition of the Panel, under Proposal 1, put impartiality at risk and are likely to introduce at least some bias, through the inclusion of a Commission member of staff. The move away from hearings towards paper-based decision making is also of concern, under Proposal 2, particularly in the context of enforcement action which could have significant and costly implications for operators.