UK government announces reforms to consumer ADR services

The UK government recently published a report announcing a wide range of far-reaching changes to the UK competition and consumer protection regulatory regimes, following a consultation last year.

The key reforms are examined on our Competition Notes blog, here.  Below, we highlight a less prominent aspect of the report, regarding the role of ADR services in consumer markets.

Under the banner of "supporting consumers to enforce their rights independently", the report addresses the following  issues.

• Consumer awareness:  The report recognises that the landscape of consumer ADR services is decentralised, complex and difficult to understand, with multiple schemes in some sectors and none in others.  Although noting that consultation responses advocated the creation of a single entry and signposting point, the report does not announce any specific proposals in this regard. Rather, it will continue to work with relevant stakeholders "to help promote ADR and ensure ease of access".
• Business response times:  The report notes that in regulated markets, most regulators have typically set an informal upper limit of eight weeks for businesses to resolve complaints before consumers are entitled to take a dispute to ADR.  The consultation process indicated support for reducing the standard response time to four weeks, although some concerns were expressed that in some sectors this could prevent traders from properly investigating claims and place additional burdens on business.  The government has decided against imposing a standardised four week response time but will continue to to explore the case for reducing the current informal upper limit while ensuring appropriate safeguards for complex cases.
• Quality and oversight of ADR services:   In the consultation, the  government  signalled its intention to improve the quality and consistency of consumer ADR services, to increase business and consumer confidence in ADR.  In a significant announcement, the report confirms that it intends to:
  • require "all businesses that offer dispute resolution services in consumer markets" to be approved under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015; and
  • strengthen the existing accreditation framework to ensure a common set of standards are applied and that providers can be held accountable.

'Consumer ADR' is usually understood as referring to the services provided by dispute resolution bodies set up specifically to deal with consumer/trader disputes, such as Ombudsmen and  trade association schemes.  It is currently not clear to what extent the new approval requirement could extend to individual mediators/neutrals or small independent ADR bodies which do not operate within any particular consumer sector but are available to deal with disputes that could be categorised as consumer disputes.

• Improving business take-up of ADR in non-regulated markets:   The consultation recognised that, while in the regulated consumer sectors it is generally mandatory for traders to participate in ADR schemes, in sectors where participation is voluntary there is little engagement by business particularly amongst SMEs.  Although the report notes strong support for it in the consultation responses, the government appears to be not proceeding with a proposal that business participation in ADR should be made mandatory in the motor vehicles and home improvements sectors.  The report's conclusion with respect to improving business take-up is limited to supporting the Ministry of Justice's ongoing wider policy review of the role of ADR in civil disputes generally.