In addition to the Act, there are various ADR regulations coming into force, which will set out a new procedure for dealing with consumer disputes, designed to increase the use of ADR. ADR comes in various forms, for example mediation (where a third party helps the parties reach their own decision) and arbitration (which offers a binding decision) and is designed to provide participants with an alternative to court proceedings.
Under the new ADR regulations, with effect from 1 October 2015 businesses selling goods, services or digital content to consumers will need to provide consumers with details of a certified ADR provider (“Certified Provider”) in their sector. The Chartered Trading Standards Institute (CTSI) has been given the power to “certify” ADR providers and a list of those certified to date can be found on their website.
Many of the Certified Providers take the form of sector specific ombudsmen. These schemes are usually based around making recommendations for an agreed settlement but with the ombudsman making a final decision if the parties do not agree.
When and how this information needs to be provided to consumers will depend not only on the business’ wishes but also on the requirements of the business’ trade association. Essentially, if, as a business, your trade association requires you to offer ADR to consumers, you will need to advise the consumer of the relevant Certified Provider, both on your website and in your terms and conditions. If, however, you are not required by your trade association to offer ADR services, you need only advise the consumer of the potential availability of ADR, if you are unable to resolve the dispute.
The word “potential” is used above as, provided that you are not required by your trade association to use ADR services, you need not participate in any form of ADR, even though the consumer may wish to. The ADR Regulations specifically state that a business must give the details of a Certified Provider to the consumer and that when providing such information, the business must state whether or not it is willing to engage with the Certified Provider.
The fact that a business tells the consumer that it does not wish to participate in ADR may not stop the consumer from engaging with the Certified Provider, whose details have been provided. Once, however, a Certified Provider has been contacted by the consumer, it will, provided it is willing to take on the case, write to the business. Businesses will need to be alive to the fact that, unless compelled to engage by their trade association, they do not need to engage with the Certified Provider, even though contact may be made.
Time will tell as to how the cases will be managed but it is worth noting that Certified Providers may only charge the consumer a nominal fee, whereas the fee charged to the business is unregulated and may be payable even if the consumer wins.
Schemes vary but often the business will be bound by the decision, whereas the consumer will remain free to take the matter to court, although he may well be dissuaded from doing so.
Although the use of ADR has not been made obligatory across the board by the ADR Regulations, it is clear that the intention is to put pressure onto businesses to sign up to ADR procedures and moreover, to be seen to be doing so by consumers. This thereby enhances the businesses’ reputation for customer service, as consumers awareness of the ADR Regulations grows.
The ADR process is intended to be quick, with decisions being made within three months of referral.
There is often a fear in business that ombudsmen schemes can be too biased towards consumers and hold businesses to an artificially high standard. However, as the schemes need to attract buy-in from businesses, they may be more balance, although it is too early to give a view on this. Certainly the prospect of referring unreasonable complaints to an independent third party to resolve may be very appealing.
We will continue to provide updates on consumer law as the new provisions come into force, however, if you have any queries in the meantime contact email@example.com.