The gambling regulator has told MPs that a customer’s postcode can only be used “in combination” by betting firms to assess their financial risk.

The heads of the Gambling Commission appeared in front of the Culture, Media and Sport Committee as controversy grows over the introduction of affordability checks on bettors as part of the development of the gambling White Paper.

Chief executive Andrew Rhodes, his deputy Sarah Gardner and executive director Tim Miller are facing questions from members of the committee as part of its inquiry into gambling regulation.

The industry watchdog is in the middle of a consultation about its proposals for implementing the White Paper and has attracted intense criticism for its interpretation of the Government’s plans around financial checks.

Discussing the use of credit agencies with MPs, Mr Miller said: “We’ve worked incredibly closely with the Information Commissioner’s Office to ensure that this is compliant with data protection legislation, and they will continue to work with us as this is developed further.

“Importantly, the rules will be very clear that any data that is collected through this can only be used for the purposes of helping to protect consumers and cannot be used for commercial purposes.”

Asked what other type of agency could be used, Mr Miller said: “At the moment it will primarily be credit reference agencies, but clearly there’s a range of other data that can be publicly available that can be useful here.

“So, for example, postcode data can be really useful in terms of helping you understand where areas of deprivation exist.

“Now, that won’t necessarily immediately tell you that for that customer that lives in that postcode that they are at greater risk. But if they’re living in an area of greater deprivation then, actually, I think it is right that we say there is greater onus on the operator to really understand whether that customer can afford the sort of gambling that they are engaged with.

“So that sort of publicly available data would supplement what you’d have from credit reference agencies.”

Mr Rhodes added: “It’s important to say that these things are taken in combination.

“I can almost guarantee someone’s writing a tweet now saying ‘The Gambling Commission says whether you can gamble or not depends on whether you live in a poor area or not’.

“And what we’re actually saying is there’s a whole wealth of data that can be used that builds a risk picture. It’s not one thing on its own. You take things in combination.

“So there is no guarantee that because someone lives in an area that they have a particular income, but you take it in combination with something from credit reference agencies, other public information, other information we can gather – you start to build a risk picture.”

The White Paper proposes that “enhanced financial checks” will be triggered by a spend of £1,000 in 24 hours or £2,000 in 90 days, but politicians have repeatedly promised the checks will be frictionless.

Writing in the Racing Post in April when the White Paper was released, gambling minister Stuart Andrew said: “(For) the very few players who undergo checks, these will happen in the background against information already publicly available so the process is completely frictionless.”

Culture minister Lucy Frazer, speaking in the Commons when the White Paper was unveiled, also said: “Most people will not know that the checks … are happening. They will be frictionless and happen behind the scenes: 80% of people will have to do nothing at all and 20% will have a simple check on whether they have been made bankrupt or have a county court judgment against them.”