Industry taken to task over use of ‘gagging orders’ in settlements

The Gambling Commission has warned the gambling industry that the indiscriminate use of non-disclosure agreements (NDAs) in settlements with customers over problem gambling issues will not be tolerated.

Last year, stories broke in the national media about some major bookmakers adding ‘gagging orders’ to deals with their customers preventing them from going to the Commission with a complaint against any breaches of social responsibility obligations.

This morning the regulator issued a clear statement on such activities, especially as companies are duty bound to raise any failings they find in their processes with the Commission.

It said: “We have become aware that some licensees have been including non-disclosure clauses within settlement agreements with consumers and we are continuing our investigation into these. Some of these agreements may have had the effect of preventing those consumers from reporting regulatory concerns to us, by either excluding disclosure to any third party or, in some cases, explicitly preventing customers from contacting the Gambling Commission.”

The Commission wants to ensure that:

• non-disclosure clauses do not result in consumers feeling they are unable to notify the Commission or other regulators or law enforcement agencies of conduct which might otherwise be reported
• licensees notify the Commission of offences under the Gambling Act, including breaches of licence conditions or social responsibility codes of practice
• consumers do not refrain from reporting matters to the Commission because they anticipate a settlement which
• contains a condition that states they will not complain to the Commission
• those suffering gambling-related harm can freely discuss their gambling history with treatment providers.

It also pointed out that NDAs themselves are not prohibited: “We recognise that in certain commercial contexts, use of NDAs is commonplace and such agreements, when used properly, can benefit both parties. Examples of appropriate use might include resolving supplier or intellectual property disputes. This statement should not be taken to prohibit the use of NDAs in appropriate circumstances.”

The Commission said that it considers that non-disclosure clauses would be improperly used if their effect was to prevent, impede or deter, a person from:

• reporting misconduct, or a breach of our regulatory requirements to us, or making an equivalent report to any other body responsible for supervising or regulating the matters in question
• making a protected disclosure under the Public Interest Disclosure Act 1998
• reporting an offence to a law enforcement agency
• co-operating with a criminal investigation or prosecution
• seeking treatment for problem gambling and discussing their gambling history with treatment providers

The regulator said that non-disclosure clauses or other settlement terms must not stipulate, and the person expected to agree the settlement agreement must not be given the impression, that reporting or disclosure as set out above is prohibited. It may be appropriate for the settlement agreement itself to be clear about what disclosures are not prohibited by the non-disclosure clause.

It added: “If a customer in the course of negotiating a settlement agreement states that they intend to report a matter to the Commission, we expect licensees will normally be able to inform the customer that they have already self-reported the incident. In appropriate cases, the licensee may also have made a suspicious activity report and informed us of this, in accordance with paragraph 24 of Licence Condition 15.2.1.

“When there is a failure to self-report to us as required by Licence Condition 15, and there has also been a settlement agreement containing an NDA concluded in relation to the underlying facts, this may be seen as an aggravating factor in any regulatory action the Commission may choose to take.”

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The issue of dialogue and interaction with the Gambling Commission will be covered at Betting on Football on 19-22 March at Stamford Bridge. The Science of Compliance track on Thursday 21 March concludes with a session on The best ways of dealing with regulators, which will cover best practice in keeping the Gambling Commission, and other regulators, fully informed when there is an issue.