Football Index Collapse

Justin Madders Excerpts

Tuesday 7th June 2022 Westminster Hall

[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.

--- Later in debate ---

[Justin Madders]

I am sure that we will all note that improvement in regulation. It has been a failure; that is implicit from what has been said. It reminds me a bit of the leasehold scandal. People expected products to be sold in a safe way—these were similar, life-changing sums of money—and they have been found not to be secure.

We need some concrete assurances that the blurred lines, as we have heard, are not going to cause problems in the future and that there is going to be a clear delineation of responsibility for regulation in the future. We know from what a former employee said that senior management were warned back in 2016 that there was a problem, but the company continued to take money from people in that way for another four years. I want to know what has happened to those people in charge of the company. What sanctions have been issued against them? Are they fit to be involved in any businesses at all? That is a serious question that needs answering.

In conclusion, as we have heard, the lines between what is gambling and what are financial services are increasingly blurred. Nothing fits into a neat statutory category anymore. What is clear, however, is that there need to be proper protections and regulations for our constituents so that something like this never happens again.