Martin Partington: Spotlight on the Justice System

The Department for Business Innovation and Skills has just published an important policy paper relating to alternative dispute resolution for consumers. It summarises changes in the law which come into effect in July 2015.

The paper notes that common forms of ADR are:

• mediation, where an independent third party helps the disputing parties to come to a mutually acceptable outcome
• arbitration, where an independent third party considers the facts and takes a decision that’s often binding on one or both parties.

In the UK, there are already several large and well-established ADR schemes in regulated sectors. These include:

• financial services
• energy
• telecoms

Outside the regulated sectors, many businesses are already members of voluntary ADR schemes.

Alternative Dispute Regulations 2015

Two sets of regulations, in March and June 2015, have been laid in Parliament to implement the European Directive on alternative dispute resolution (ADR) in the UK.

In outline, the regulations:

• place an information requirement on businesses selling to consumers informing them of an ADR service they may be able to use in the event of a dispute that cannot be resolved in-house (this obligation does not come into effect until October 2015)
• establish competent authorities to certify ADR schemes
• set the standards that ADR scheme applicants must meet in order to achieve certification.

In the regulated sectors, the regulators will act as the competent authority. These include

• Ofgem
• Financial Conduct Authority (FCA)
• Civil Aviation Authority (CAA)

In all other areas the Secretary of State will be the generic competent authority. He has appointed the Chartered Trading Standards Institute (CTSI) to carry out these functions on his behalf. The CTSI website sets out the bodies it has already certified as ADR providers; the information will be updated regularly as the implementation date gets closer.

While the regulations do not make participation in ADR schemes mandatory for traders, the regulations do require almost all businesses which sell directly to consumers to point the consumer to a certified ADR scheme – where they cannot resolve a dispute in-house – and declare whether or not they intend to use that scheme. The Government clearly hopes that traders will see that offering  their customers access to a free dispute resolution service, rather than going to court, will be an attractive additional service they can offer.

The Policy Paper also flags up developments in On-line Dispute Resolution where new law will be introduced in January 2016. This is designed to enable people who have bought goods or services online from other countries in Europe will have access to an on-line dispute resolution service (very much on the lines that e-Bay already offers).

It can be observed that these developments are being driven by the Department for Business not the Ministry of Justice – but they are clearly in line with MoJ policy relating to proportionate dispute resolution.

To read the policy paper, go to https://www.gov.uk/government/publications/alternative-dispute-resolution-for-consumers/alternative-dispute-resolution-for-consumers

To read about the Chartered Trading Standards Institute go to http://www.tradingstandards.uk/home.cfm

To see the list of certified ADR providers go to http://www.tradingstandards.uk/advice/AlternativeDisputeResolution.cfm