Football Index Collapse

Aaron Bell Excerpts

Tuesday 7th June 2022 Westminster Hall

[Aaron Bell (Newcastle-under-Lyme) (Con)]

It is a pleasure to serve under your chairmanship, Ms Ghani, however brutal the time limit may be. I congratulate the hon. Member for Blaydon (Liz Twist) on securing this important debate and setting out the case so clearly—I will not do so again, given the time limits. I draw the attention of the House to my entry in the Register of Members’ Financial Interests, and let people know that I worked for Bet365 for 15 years before I came to this place. I have long experience of the Gambling Commission, and while I was in that role, it was frequently behind the curve and asleep at the wheel, which is one of the accusations levied at them regarding Football Index. In a period during which the gambling landscape was incredibly innovative, too many firms went bust with ante-post liabilities, too many punters lost money, and there was too little redress for people. Sadly, that is again the case today.

[Ms Nusrat Ghani (in the Chair)]

Order. Mr Bell, because some people have left the room, we have now increased the time limit to three minutes for you.

[Aaron Bell]

That is incredibly kind, Ms Ghani. Thank you very much.

This is a particularly egregious case. Five constituents have written to me about it; I will not name them, because I do not have their permission to do so, but a number of them have lost thousands of pounds. In this case, the Gambling Commission failed to identify the key features of the product, which then changed while Football Index was running it, and the Gambling Commission did not seem to notice. Andrew Rhodes, who I believe is a good man—I will come to that in a bit—said in his response that the Gambling Commission does not believe it licensed a Ponzi scheme. That may not be the case, but he also said,

“BetIndex was not recruiting enough customers to compensate for depleting its financial position”—

as it did by increasing the dividends—

“and ultimately collapsed as a result.”

If such a company is not recruiting enough customers to pay out the ones it already has, that looks like a Ponzi scheme to me.

It is clear that the ultimate blame lies with the operator. We have already heard a call for the directors be held to account, which I absolutely support, but we must be better at protecting people, as a Government and as a state. As I said, I have five constituents involved. I support what the hon. Member for Luton North (Sarah Owen) said about people wanting restitution and justice as well as compensation.

I am also very concerned that these people are vulnerable in other ways now. Football Index is finished, but there are other online products out there that, in my opinion, share some of the same characteristics. They are attractive to young men, in particular, because they look like get-rich-quick schemes. I am thinking of the crypto space and the various coins that are designed to be pumped and dumped. If people get in at the right moment they can make a profit, but if they get in too late they might lose their life savings.

Similarly, there is this ridiculous craze for non-fungible tokens, which, to their eternal shame, many football clubs and sports stars have endorsed. This is completely deplorable. I do not think those are regulated at all. Perhaps we can do something about that through the Online Safety Bill. I know that the Gambling Minister is busy with the Online Safety Bill Committee today, and I welcome his substitute, the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), who used to be my Whip.

This situation mostly affects young men. I believe we owe them a duty of care. My five constituents—all young men—believed, because they saw the kitemark, that the Gambling Commission understood, and almost endorsed, the product. Obviously it did not. If we license these sorts of products, then we ought to be standing behind them. We are not standing behind them now, as they are struggling to get any sort of compensation at all, although there is obviously an administration process going on.

I am sure that everyone here will have constituents who have suffered as mine have. We owe it to them to get to the bottom of this and give them some restitution. I will yield my final 20 seconds.

[Ms Nusrat Ghani (in the Chair)]

Beautifully done, Mr Bell.

--- Later in debate ---

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair, Ms Ghani. I congratulate my hon. Friend the Member for Blaydon (Liz Twist) on securing today’s debate. As we can see, it has been very well attended.

This issue has been described as the biggest scandal in British gambling history, with thousands of customers facing cumulative losses of up to £124 million. However, I think that describing it purely as a gambling scandal does not really show any empathy or understanding about the magnitude. Comments such as those attributed to the Gambling Commission—that people should not gamble more than they can afford to lose—fail to acknowledge this was not like putting a tenner on the 2.20 at Chepstow. Football Index promoted itself as an investment, with “guaranteed yields” in a highly regulated environment, and no bets have actually been lost, of course; the money was effectively stolen.

I have a constituent who has lost a six-figure sum, and some people’s losses are into seven figures. Individuals have been driven to the brink of suicide, marriages have collapsed, families have been torn apart, and life savings for weddings, house deposits or retirements have all vanished. This was not about people chasing their losses; it was money that was supposed to have been invested and was then wrongfully taken. While there has been a Government review—and, of course, promises to do better next time—there has not been justice.

Football Index has been described as a Ponzi scheme, and we now know that its executives were warned soon after its launch, as early as 2016, that its so-called stock market would prove to be unsustainable. Proposals to make the index more stable were actually rejected because of concerns about the possible impact on revenue. That all occurred some five years before Football Index’s eventual collapse, leaving serious questions about the effectiveness of its regulation.

According to newspaper reports, the Gambling Commission was warned in January 2020 that Football Index was

“an exceptionally dangerous pyramid scheme under the guise of a football stock market”.

Has the Minister spoken to the Gambling Commission about this? What did it say? What conclusions has the Minister drawn following this?

[Aaron Bell]

I am grateful to the hon. Gentleman for giving way because it allows me to make a point that I should have made in my speech. I believe that the new CEO of the Gambling Commission, Andrew Rhodes, understands the problems that occurred in the past. I met him in February to discuss this case and my overall experience with the sector. I think he accepts that mistakes were made repeatedly under the previous leadership of the Gambling Commission. I wanted to put that on the record and I thank the hon. Gentleman for giving me the opportunity to do so.