Football Index Collapse

Jessica Morden Excerpts

Tuesday 7th June 2022 Westminster Hall

[Jessica Morden (Newport East) (Lab)]

I congratulate my hon. Friend the Member for Blaydon (Liz Twist) on securing a debate on a scandal that has caused much hardship. Constituents in Newport East have been among those who lost life-altering sums of money when Football Index collapsed last year. Some £124 million-worth of bets that were placed by customers in full trust with a company that was licensed by a UK regulator have all but disappeared. The scale of this loss is nothing like the sector has seen before. Hon. Members were right to say that individuals have been driven to the brink of suicide, marriages have collapsed, families have been affected, and life savings for weddings, houses and retirements have vanished. Over a year on, they are still dealing with scars on their mental health and finances, which has been reflected to me by constituents.

My hon. Friend the Member for Blaydon was right to stress that Football Index was not an ordinary gambling firm. It modelled itself as an investment package, and in an utter failure of regulation by the Financial Conduct Authority and the Gambling Commission, customers felt wrongly assured that their long-term investments in the index were secure. The Gambling Commission was aware that these investments were more risky than customers thought. The Sheehan review said that it was an “exceptionally dangerous pyramid scheme”. One constituent pointed out that Football Index took in a significant amount of capital at the beginning of the pandemic, and that its aggressive use of capital and failure to maintain a liability reserve to meet those investment obligations led to the rapid deterioration of the business.

The distinctive nature of Football Index also meant there was confusion, as has been mentioned, as to whether it was a gambling product under the remit of the Gambling Commission or a financial product under the FCA. The fact that there were unresolved discussions between the two authorities about co-regulating Football Index shows that there are still gaps in the framework, which seemingly enticing new business models can fall through. The Government need to iron this out.

There are serious questions for the FCA to answer. It twice stated that the product fell within its regulation, yet seemingly changed its mind. The Government should now look at the feasibility of a compensation scheme for the victims, using the precedent set by the collapse of London Capital & Finance, as well as securing proper redress for those who have lost so much. The Secretary of State should also ensure that the alarming regulatory failings that allowed this to happen are never repeated.