The Office for Product and Safety Standards (OPSS), the UK's product safety regulator for all consumer products (except vehicles, medicines and food), has published new guidance for businesses on the use of confidentiality clauses in consumer settlement agreements.
Where consumers claim compensation against the producer of a product for damage, death or personal injury caused by a defect in the product, consumers and businesses will in some cases mutually agree a settlement as an alternative to court action. Some businesses choose to include non-disclosure clauses (also known as confidentiality clauses).
The OPSS recognises the value of settlements and acknowledges that confidentiality clauses can incentivise settlement and benefit both parties. However, they raise concerns that the agreements may prevent the disclosure of safety issues to regulators and, in the case of product safety recalls, discourage consumers who have signed non-disclosure agreements from talking about their experiences.
To address these concerns, the OPSS has published new guidance which should be taken into account when drafting settlement agreements, to ensure that information relating to the safety of a product can be shared appropriately and consumer safety and confidence are maintained. While this guidance is not legally binding, it should be carefully considered by all product manufacturers or distributors when settling product liability claims with consumers.
Best practice tips
Here are the OPSS' best practice tips:
- Ensure the wording is in plain English;
- Be clear and specific about what can and cannot be shared and with whom;
- Avoid overly broad phrases, which are unlikely to be enforceable e.g. "You cannot discuss this with anyone, without exception";
- Avoid clauses that could give the impression to the consumer that they cannot discuss the case with appropriate public authorities;
- Avoid any verbal or written implication or say that the claimant cannot discuss the case with the appropriate authorities;
- Make the claimant aware that the non-disclosure clause does not prevent them from speaking with appropriate public authorities about the issue; and
- Avoid clauses that would prevent consumers from passing on information about a corrective action or recall programme that is likely to be in the public interest.
The guidance was published on 31 July 2020 and is available here.
For further information on and support with product safety, please contact our Product Litigation, Safety and Recall team.