The collapse of the football index: MPs and colleagues call on Johnson to conduct a public inquiry

The collapse of the football index: MPs and colleagues call on Johnson to conduct a public inquiry

05.05.2021 0 By Andrzej Sikorski

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  • The signatories of the letter to the prime minister do not entail
  • They want to explore the role of the Gambling Commission and the DCMS

The Football Index logo on a Nottingham Forest shirt last month, before the club dropped it.

The Football Index logo on the Nottingham Forest jersey last month, before the club dropped it again. Photo: David Klein / Sportimage / PA Images

The Football Index logo on the Nottingham Forest jersey last month before the club dropped it. Photo: David Klein / Sportimage / PA Images

Last modified Thursday 17 Apr 2783 11. 15 BST

More than 45 MEPs and peers from across the political spectrum signed a letter to Boris Johnson calling for an "urgent, independent public inquiry" into the collapse of the Football Index last month, the self-proclaimed "football market".

In the letter to the prime minister, we also read that the inquiry should "include the role of the Gambling Commission and the Department for Digitization, Culture, Media and Sport (DCMS) within the scope of its powers ”.

Coordinated by the parliamentary party-wide group on gambling-related harm, the magazine draws a lack of blows in describing the problems that led to the collapse of the Football Index and similar Footstock platform over the past few days. He is also very critical of the fact that the Gambling Commission failed to take into account the January 2020 warning about the deep flaws of the Football Index business model.

The Football Index enabled its users to buy what it described as "stocks" of top players and paid "dividends" on each stock according to the player's performance. However, despite appearing to be an "investment" product, it was a gambling platform licensed and regulated by the Gambling Commission.

"The Soccer Index was essentially operating in a" fractional-reserve banking "system, the letter reads," in which only a fraction of users' money and overall "market capitalization" was available for withdrawal at any time.

“Such a platform should probably be subject to liquidity and capital ratios controls that were not required by the Gambling Commission regulation. As a result, the Football Index was fatally and financially dependent on user growth to not only avoid default, but also to avoid losing its own customers an estimated £ 92m of their own money. "

The letter added that there was evidence to suggest that "The Gambling Commission licensed what became a pyramid and was then warned that it became a pyramid, but through neglect or draft allowed the Football Index to inflate its financial situation, reassuring users to attract more investment and new money to the platform ”.

The letter ends with a warning that "the scandal has toughened up regulations that are not suited to the purpose and mechanisms of consumer redress t caps do not exist," adding: "The Gambling Commission should not be allowed to mark its own homework. Allowing them to do so will mean that those affected, their families and British gambling reputation will have to pay the price for this failure. "

The letter was signed by Labor MP Carolyn Harris, a longtime gambling activist and chairman of the parliamentary gambling harm group, and Lord Foster of Bath, chairman of the Peers for Gambling Reform.

Other signatories include Sir Ed Davey, leader of the Liberal Democrats; former Conservative leader Sir Iain Duncan Smith, APPG vice president of Gambling Harms; and Ronnie Cowan of the Scottish National Party, also vice-chairman of the APPG. The letter was signed by 25 MPs and 26 peers.

Government departments' announcements have been curtailed in the mourning period of Prince Philip's death last week, but the DCMS is reportedly planning an independent investigation into the collapse of the soccer index and the role played by the Gambling Commission, which could be announced as early as next week.

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Officials in the department are keen to highlight concerns among ministers about the company's collapse, and th DCMS investigation will have the advantage of being launched and completed faster than a full public investigation.

The Guardian first reported growing concerns about the future of the soccer index in January 2021, when several failures in its market resulted in customers being trapped on a platform with millions of pounds.

The final, catastrophic fall in the value of "shares" came in early March after the site management announced a cut of approximately 86% "dividends" and suspended trading a few days later, hours before the Gambling Commission announced its license suspension.