Changes to Consumer Dispute Resolution

The Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 (‘the Regulations’) come into force on 1 October 2015.

Essentially the Regulations aim to provide consumers with an alternative to the court system to address their dis-satisfaction and to provide confidence to consumers. ADR must now be made available for any dispute between an individual and a trader by the provision of an ADR entity. This means that traders must give consumers details of a certified ADR provider and inform the consumer as to whether or not they intend to use that provider. This has to be told to the consumer regardless of whether the trader intends to use ADR to resolve a dispute.

Who does this apply to?

This Regulation applies only to traders providing goods or services to consumers. It does not apply to business-to-business or consumer-to-consumer contracts and contract for the sale of property and tenancy agreements.

Trader’s complaints about the consumers conduct and disputes unrelated to the contract, such as abusive behaviour or discrimination are not covered.

Which contracts does this affect?

Current guidance states that even if contracts were entered into before 1 October 2015, the trader must now respond to customer complaints using the below method.

Practical steps to take

If the trader is already subject to legislation or under an obligation by its trade association to use ADR (such as the financial and telecoms sectors) then trader needs to provide the name and website address of the ADR entity. This can be on the trader’s website or in the terms and conditions of sale and/or service. The trader is then bound to use that provider of ADR services.

For all other traders the following information must be provided to the consumer after the internal complaints handling has been exhausted:

• That the complaint is unable of resolution;
• The name, address and website of an ADR entity who is capable of dealing with the complaint;
• Whether the trader is obliged or will be prepared to undertake ADR.

Traders must ensure that the consumer by a durable medium such as paper or email.

Does a trader have to engage in ADR?

No.

The obligation to undertake ADR has not changed, those for which it was previously mandatory must still comply but it puts no new obligation on those that currently don’t use the system. The obligation is on the trader to provide the information, not engage in it.

Effect of non-compliance

If you are a trader compliance is mandatory and the Department for Business, Innovation and Skills has indicated that enforcement includes:

• Liability to Trading Standards under civil enforcement;
• Court order for compliance;
• Unlimited fine; or
• Up to two years imprisonment.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.