MPs demand parliamentary inquiry into Football Index “pyramid scheme”

A group of more than 40 UK MPs have demanded a public inquiry into Football Index, Footstock and the conduct of the UK Gambling Commission (UKGC) in dealing with the now-collapsed companies. In a letter to Prime Minister Boris Johnson, members of the Gambling Related Harm All Party Parliamentary Group (APPG) slammed the failure to address issues identified in Football Index in documents seen by the regulator as early as January 2020. “From the evidence, it appears as though the Gambling Commission licensed what became a pyramid scheme, was subsequently warned that it had become a pyramid scheme, but by negligence or design allowed Football Index to overstate its financial position, reassuring its users to attract more investment and new money into the platform,” the letter said. The letter highlights the subsequent four-month delay to launch an investigation into Football Index as evidence of potential negligence by the UKGC. It further claims regulators were warned that in posing as a stock market, Football Index created a false sense of security over money invested in the platform. “Football Index were essentially operating a ‘fraction reserve banking’ system where only a portion of users’ money and overall ‘Market Cap’ was available to withdraw at any one time,” MPs wrote. “Such a platform should arguably have been subject to liquidity controls and capital ratios, which regulation by the Gambling Commission did not require. “As a result, Football Index was fatally and financially reliant on user growth to not only avoid insolvency but to avoid its own customers losing what has been estimated as being £90m of their own money,” the letter added. Earlier this week, Football Index administrators Begbies Traynor initiated a customer claims process for all Football Index customers, inviting them to submit claims for lost monies online. MPs highlighted the need for an urgent public inquiry “to get to the bottom of who knew what and when”, suggesting current UK gambling regulation is not fit for purpose. The letter also recommends a public inquiry would identify perceived failings by the UKGC and prevent any potential recurrence of a similar scenario in the future. “The Gambling Commission should not be allowed to mark its own homework,” MPs wrote. “Allowing them to do so will mean affected individuals, their families and the reputation of British gambling, will be left to pay the price for this failure. “That is why we need a public inquiry,” the letter concluded.