Gregory Hunt on the meaning of Alternative dispute Resolution – and why it matters to you (as published today by Resolver)
As a consumer I have heard the words “mediation” and “arbitration” on the news and even on Eastenders, and consumer shows are full of the word “ombudsman”, but unless you have actually used alternative dispute resolution (ADR), you probably don’t really know what it is or whether the media have referenced examples of it in the right way (they often haven’t!).
In this series of blogs for Resolver, I will look each month at the different types of ADR – not just mediation, arbitration and ombudsmen, but also conciliation and adjudication. I will also look at the technology tool – online dispute resolution.
Whilst ADR isn’t only used for consumer disputes – it is used by businesses small and large – these blogs aren’t going to look at commercial ADR, they will concentrate purely on what is around for consumers – to help you understand what is available when you have an unresolved complaint with a trader.
So what is ADR then?
ADR itself stands for “Alternative Dispute Resolution”. “Alternative” is used because it is meant to be an alternative to going to court. ADR should be quicker, cheaper and easier than going to court – but that isn’t always the case.
These days ADR has become more commonly used – for many the court is now the alternative. If you have a problem with a business in a regulated sector – energy, communications, financial services, aviation and others – then ADR is used as often, if not more often, than the small claims court. In unregulated sectors, such as retail, ADR also features prominently.
Recent History of Consumer ADR (like a Dummies Guide but I’m not calling you a dummy!)
ADR has been around for ages now. The ABTA Arbitration Scheme is the oldest running consumer arbitration scheme in Europe – starting in the very early 1960s – so it is likely that a fair percentage of people reading this (including me) will not have even been born when it started in earnest.
In the UK it has been provided by private ADR businesses for some time. The biggest provider used to be The Chartered Institute of Arbitrators (CIArb). In its glory days between, say, 1995 and 2000, CIArb ran around 60 consumer arbitration schemes – insurance, travel, dating agencies, electrical goods, private health cover, coal mining subsidence, archaeology, caravan pitch fees, valuations (property and fine art), home removals and even funerals. Yes, funerals – I’ve got some interesting stories about them for another day!
But the government of the late 1990s decided that there should be a single ombudsman for financial services, and various bodies were put together, along with a number of schemes run by the CIArb, to form the Financial Ombudsman Service (FOS). All these years on the FOS is huge – it is the world’s largest consumer ADR entity.
Since FOS was set up, loads of ombudsmen have been set up, and they compete with each other and other ADR providers (there are more than 20 providers certified by Trading Standards – more of that later) to provide ADR in the consumer market. It is a fiercely competitive and growing sector in its own right.
The next biggest in the UK after the FOS is Ombudsman Services. They were originally known as Otelo – The Office of the Telecommunications Ombudsman – and they took a number of established arbitration schemes away from CIArb when the regulator (Oftel at the time, now Ofcom) decided it wanted an ombudsman for the sector. Some communications providers didn’t want an ombudsman, though, and they challenged Otelo and an alternative scheme was born – CISAS – and from CISAS came the development of consumer adjudication as an alternative to ombudsmen.
There were also movements in Europe. In around 2002 CIArb launched Europe’s first online consumer arbitration scheme for Ford Motor Company. It was a great scheme, but in the time of dial-up internet it was years was before its time.
Also from Europe came the Mediation Directive in 2011. This only applies to cross-border disputes and hasn’t really made any difference at all.
Then came what was hoped would be the big one for consumers, but which so far has been a large disappointment – The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities & Information) Regulations 2015.
Since 1st October 2015, the majority of businesses have obligations under the Regulations to signpost a consumer with an unresolved complaint to a certified ADR Entity for its sector, telling the consumer whether they would take part in ADR or not at the same time. There is no obligation to tell the ADR Entity in question of the intention to use, or not use, their services. Since February 2016 businesses have obligations also under the Online Dispute Resolution (ODR) Regulations.
These were supposed to change everything, but lo and behold, they haven’t been policed and have had little or no effect – much to the frustration of the ADR bodies.
What act came into effect in 2015?
The Consumer Rights Act 2015 also became law in 2015, replacing three major pieces of consumer legislation – the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations and the Supply of Goods and Services Act.
This Act is really important and did get some coverage in the media, but not as much as it should. It sets out your rights as a consumer (great name for an Act then!).
So, ADR is out there, there is lots of it but unfortunately for you, the consumer, there is very little choice. You have to either use the ADR body your trader chooses or go to court. You do at least have that choice, though – and most consumer ADR is free at the point of use. Next month we will start to look at the different types of consumer ADR in more detail, starting with mediation.