Football Index Collapse

Debate between Liz Twist and Clive Lewis

Tuesday 7th June 2022 Westminster Hall

[Liz Twist]

I certainly agree and will touch immediately on the issue of redress. As I was saying, the issues identified must be addressed to ensure that those affected have the answers they need and we must look again at the regulatory failing that allowed this situation to come about. Tens of thousands of customers had—and lost—more than £124 million in the system at the point of its collapse. Of course the question of redress must be revisited, as hon. Members have already said, because the clear failings of the regulations applied to BetIndex Ltd, a subsidiary of Fame Ventures Ltd, have left many people in a difficult position.

The Sheehan report, as we have heard, highlights a range of issues about the regulation of the product; it highlights several failings by both the Gambling Commission and the Financial Conduct Authority. It sets out that from early in the life of Football Index, the product was not regulated correctly and the platform’s “go to market” function was not notified to the Gambling Commission. However, it states that the Gambling Commission had reviewed the product twice and this was not noted in the reviews carried out, meaning that Football Index was given its licence and launched without any consideration of one of its two main features. At that point, it was already clear that the Gambling Commission should have done more to protect the rights of customers. Given Football Index’s likeness to an exchange or a market, the Gambling Commission should have notified the Financial Conduct Authority.

The Sheehan report also states that the Gambling Commission became “fully aware” of the issues with Football Index in 2019, but it still allowed customers to put money into the platform, meaning that customers lost even more money because of the commission’s inaction.

In 2019 the Gambling Commission referred Football Index to the Financial Conduct Authority, and in September that year stated that Football Index should be authorised by both the FCA and the GC. Despite that, again nothing was put in place. Clearly, the failings allowed customers to bet more and more into a platform that was not correctly regulated. Now, in the aftermath, people are having to deal with the fear that they may never get back the money that they put into the platform. The life-changing impact that could have on some individuals is clear.

[Clive Lewis (Norwich South) (Lab)]

rose—

[Bell Ribeiro-Addy (Streatham) (Lab)]

rose—

--- Later in debate ---

[Liz Twist]

I most certainly agree. I know the real impact that the collapse has had on my constituents’ wellbeing—not just financially. My hon. Friend makes a valid point.

[Clive Lewis]

Will my hon. Friend give way?

[Liz Twist]

I will take one more intervention and then I must make progress.

[Clive Lewis]

I thank my hon. Friend for giving way, and for making such a powerful speech and securing this debate.

I wanted to intervene at this point, when my hon. Friend is talking about the regulatory framework, because it has comprehensively failed my constituents, many of whom have been suicidal. The collapse has led to them losing their homes or their businesses. The FCA failed them, Football Index failed them and the Gambling Commission failed them.

The Government have ruled out financial redress. Would my hon. Friend say that, in the interests of justice —indeed, if justice is to be done—and in the interests of our constituents’ wellbeing, the Government must look at financial redress again?

[Liz Twist]

I most certainly agree. It is one of the asks that I will make of the Minister later. I will try to speed up, because I am aware that so many Members want to speak.

I have made the point about the regulators and the fact that, in effect, Football Index was allowed to operate as a stock market where people traded stocks. I will now talk about the experience of people such as Chris and Collin, who are my constituents. They have given me permission to share their experiences. They told me about the difficulties the collapse has caused in their lives. Chris was saving up for a wedding and now has limitations on what he can afford. He said that Football Index

“was advertised as a great way to invest and buy shares, it was shown to be a better way to save compared to the rates banks offer. The loss of the £13,000 has limited certain aspects of what we can afford now.”

Collin also lost an incredible amount of money through this regulatory failing, which has had a direct impact on his mental health. As a result, he spent months unable to work, because of the stress and depression caused by the collapse. He told me:

“I feel a massive sense of guilt and anger that a huge amount of my family savings has been stolen. That money could have been used for my children’s future, house improvements, holidays and other investments.”

That comment again touches on the issue of regulatory failing. Football Index was able to sell itself as the “football stock market”; the language used was very public and the company even sponsored football teams high up in the Football League system. Allowing customers to believe that was incredibly misleading. The Gambling Commission and the Financial Conduct Authority should have stepped in long before they did. Their failure to understand a licensed product led to Collin, Chris and many other people across the country losing thousands of pounds.

On 17 May, I wrote to the Minister about the experiences of my constituents, and fortuitously, I received a response to my letter yesterday by email. The Minister noted that the Gambling Commission and the FCA have acted on the recommendations of the Sheehan report, so there is clearly a recognition that there was a failure in the regulation of the product. It is clear that the regulators have failed many people, like Chris and Collin, and they and I believe that they should be compensated in some way for that failure. The Sheehan report itself admits that it was

“produced under significant time constraints”

and could not provide

“as full responses…as possible”

to the issues, yet even from that condensed outline of the issues, it is clear that the regulatory failings have cost thousands of people dearly.

I welcome the gambling White Paper announced by the Government, which will seek to better regulate the market, better protect customers, and learn the lessons of this failure. However, that is simply not enough for the tens of thousands affected by the collapse of Football Index—those who have lost such great amounts of money, who are worried about telling loved ones about lost savings and growing ever more pessimistic about the Government’s handling of the matter. Those people simply want one thing: justice. On a number of occasions, the Government have stepped in when regulators and companies have failed to ensure that people are protected, so my constituents and those of other hon. Members ask, “How is this situation different?”

The Football Index action group has repeatedly asked the Government to do more to seek redress for those affected, and is willing to discuss that request with the Government and work with them to find a solution that will work for the people affected. As such, my first ask is whether the Minister will commit today to a meeting with the Football Index action group and myself to further discuss these outstanding issues.

It is clear that the failings that surrounded Football Index were severe, and the impact they have had on people’s lives will be lifelong. For that reason, those affected deserve the answers they need to move on from the situation. Will the Minister commit to another, more in-depth report, or would he be supportive of an inquiry into those regulatory failings to show that the Government and Parliament support those affected, and want to work with them to find the crucial answers that those people need?

Since the collapse of Football Index in March 2021, the regulatory failings have become clear, and the tens of thousands of people affected have lost huge amounts of money to this scandal. For them, we need to do more than learn the lessons and look forward; we need to find answers, and compensate where possible. My final ask is that the Government look again at bringing forward a redress scheme for the victims of Football Index. My constituents Collin and Chris, who have been hit hard by their losses as a result of regulatory failings, and all the other people affected across the UK, deserve answers and redress.