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Alternative dispute resolution

19 November 2014

By 9 July 2015 the British Government is obliged to bring into effect the Alternative Dispute Resolution (ADR) Directive under which the Government is under an obligation to ensure that ADR is available for any contractual dispute between a business and a consumer.

Since March 2014 the Government has been in consultation on the subject and requested responses on a number of issues relating to the Directive. The Government has now published those responses and made a number of recommendations as to the steps that now need to be taken.

Background

In July 2013 a Directive was published which obliges the Government to bring in the ADR Directive by 9 July 2015 ensuring that ADR is available for any contractual dispute between a consumer and a business. However it should be noted that it will not make the use of ADR mandatory.

The Government says that it recognises the importance of ADR and that if there is a simplification of the ADR landscape then this would "increase awareness and uptake of ADR".

There are a few exceptions to the Directive:

  • business to business disputes are not covered
  • disputes initiated by a business against a consumer are not covered
  • health services and education providers are also excluded.

In addition the Directive imposes certain requirements on ADR providers:

  • ADR must be available for a nominal fee or free of charge (with businesses picking up the tab)
  • within three weeks of receiving the papers the ADR provider must state if they cannot deal with the papers
  • the ADR process must be completed within 90 days
  • consumers must have the ability to submit their complaint online and offline.

The Government therefore consulted on how the Directive should be implemented. 84 organisations responded; primarily governing bodies, trade associations and affinity groups. The Government has now indicated what steps it will now take to implement the Directive and the steps that businesses need to take if they deal with consumers.

Main points to note

  1. Information to be provided by businesses From July 2015 businesses must provide information about an appropriate certified ADR provider to the consumer and to indicate if they will use ADR to settle the dispute. For businesses that conduct their business online there will be an obligation to provide a link to the online dispute resolution (ODR) platform on their website (see further below). This obligation comes into effect in January 2016.
  2. ADR providers A central list of certified ADR providers will be held. Further the ADR providers will be monitored to ensure that standards are maintained. For businesses who do not have their own ADR provider, there will be access to a residual ADR scheme. An invitation to bid for this service will be sent out shortly and it is anticipated that a supplier will be appointed in early 2015. It is expected that fees will be consistent with the fees currently being charged in the marketplace for these services. It is expected that in time the residual scheme will become self-financing.
  3. Complaints helpdesk The Government will work with Citizens Advice to set up a complaints helpdesk where assistance will be given to consumers as to how they should conduct their dispute with a business. Further funding will be made available for this.
  4. Online dispute resolutionThe Government will set up an ODR Contact Point. This is designed to help consumers with cross border disputes and will cater for all disputes submitted through the Commissions ODR platform. The consultation looked at whether the Contact Point should extend to domestic disputes but the Government declined to extend the Directive to include domestic disputes. However the Contact Point will have the discretion to help with domestic cases if necessary.

Going forward, the Government will now work with ADR providers in terms of setting fees and looking at the procedures which need to be established. It is also anticipated that by the end of the year the Government will make literature available for businesses advising them on the changes which are coming in.

Conclusion

Businesses need to undertake a review to ensure that they are in a position to comply with the requirements of the Directive in July 2015. This will include reviewing the information that is made available to consumers offline and also online in readiness for the ODR proposals which will come into effect in January 2016. Businesses will also need to establish if they want to make arrangements with their own ADR provider or make use of the residual scheme.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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