Football Index went into administration in March, leaving around 280,000 customers out of pocket by around £3.2 million.
The betting industry watchdog and City regulator have come under fire for failing to co-operate and act quickly enough to scrutinise soccer trading platform Football Index before its collapse.
An independent report into the regulation of Jersey-based BetIndex, which ran the Football Index, found that the Gambling Commission could have worked “faster to better regulate” the service.
It also concluded that although the Financial Conduct Authority (FCA) was never responsible for regulating the index, there were “areas for improvement”, including how long the FCA took to respond to the requests from the Commission.
Football Index – where investors could bet on the success of footballers – went into administration in March, leaving around 280,000 customers out of pocket by around £3.2 million.
The report comes as the Gambling Commission is already coming under increasing pressure amid claims it is failing to tackle problem gambling.
A parliamentary group – the All Party Betting & Gaming Group – also launched an inquiry into the Commission earlier this week, after it said it received numerous criticisms about the watchdog from members of the industry.
The Commission has pledged to make changes to the way it regulates innovative digital gambling products in light of the Football Index saga.
It has, together with the FCA, agreed steps to improve ways of working, including a strengthened Memorandum of Understanding, including routes to identify and quickly overcome regulatory impasses.
The Commission has also agreed to update how it assess the risk of innovative products, including tighter rules on how they are described and making it clearer for consumers where products are gambling, rather than investments.
Another step by the FCA has been to nominate an executive director to oversee the relationship with the Commission.
Gambling Minister Chris Philp said: “We have been clear that we must learn lessons to make sure a situation like this does not happen again.
“I’m encouraged to see the Gambling Commission and the FCA are taking concrete steps on an action plan on how they will better work together.
“We will ensure that the findings from this review feed directly into our ongoing Gambling Act Review which is looking at ways we can improve regulation of the gambling industry.”
The report also looks at whether more should be done to ensure gambling firms which offer long term bets are able to cover payouts.
Andrew Rhodes – chief executive of the Gambling Commission, who has been in post since June – said: “No amount of explanation of what happened to Football Index will take away the justifiable hurt and anger its customers are experiencing having lost, in some cases, life-changing amounts of money when the gambling company collapsed.
“We accept and agree that we should have drawn a line under our efforts sooner, but this does not mean those customers would not have lost money in the event of the BetIndex company collapsing.”
He added: “The review provides a number of helpful recommendations for how both regulators can work better together and for how our regulatory approach deals with novel products.”
In April, former gambling minister John Whittingdale announced a review into the circumstances surrounding the collapse of Football Index.
Payouts to customers were approved in June after the High Court heard that BetIndex maintained a client money bank account for the benefit of its customers under the terms of a trust.
Judge Robin Vos was also told that there was about £4.5 million in the account when BetIndex went into administration.