28th December 2018

CPPD Module 15: ADR

ADR is generally a quicker, cheaper, lower risk and more amiable approach to resolving disputes than court proceedings. Whether it’s through mediation, conciliation or arbitration both parties can benefit from it. We review The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015.

By Andy Allen
Director of Operations, CTSI
Such schemes offer the trader the chance of time saving and perhaps a better chance of maintaining a good relationship with the customer, and the process is usually confidential

Alternative Dispute Resolution (ADR), very much as we see it today, has been part of the consumer protection environment for many years. Consumers are commonly aware of schemes such as the Association of British Travel Agents (ABTA) or the Civil Aviation Authority (CAA).

Trading standards professionals have made good use of various trade association bodies such as The Glass and Glazing Federation, or membership schemes such as The Furniture Ombudsman. In dealing with consumer complaints trading standards advisors and now Citizens Advice staff have recognised the unwillingness many consumers have to use the court systems to enforce their rights.

These bodies have successfully offered an ‘alternative’ to thousands of consumers. The alternative here was generally meant to be cheaper, quicker and perhaps more importantly to the consumer, perceived as less formal than using the courts. At the same time such schemes offer the trader the chance of time saving and perhaps a better chance of maintaining a good relationship with the customer, and the process is usually confidential.

ADR mechanisms
Historically, ADR mechanisms have been varied. Common forms have been mediation, where an independent third party helps the disputing parties to come to a mutually acceptable outcome; conciliation, where a third party makes a decision, which can be binding on the trader; and arbitration, where an independent third party considers the facts and takes a decision that’s often binding on one or both parties.

ADR is becoming common across many areas of law. Some courts will now insist on the parties using ADR processes before litigation. In all areas of consumer law there is an expectation that the parties try everything reasonable to resolve their dispute before going to court.

Consumers are generally well advised to try ADR even where the trader’s use of such mechanisms is voluntary. An agreement to actually use ADR may lead to a positive result for the consumer and, even where it doesn’t, the consumer usually retains the right to take the dispute to court.

Even where the trader refuses to use ADR, the consumer being able to show this was asked for and refused may well strengthen, or at the least avoid weakening, their case.

The ADR Regulations
On 9 July, 2015 The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (The ADR Regulations) came into force, giving effect to an EU directive that sought to improve ADR coverage across Europe, recognising at an EU Commission level, that much had been done to give citizens strong consumer rights, but that mechanisms for enforcing these rights needed to be stronger.

The ADR Regulations broadly delivered three interacting mechanisms. First, a list of criteria that ADR bodies must comply with if they are to become ‘Approved’ ADR bodies for the purposes of the legislation. Second, the creation of Competent Authorities – bodies who audit for approval against criteria and monitor the continued compliance of approved ADR bodies. And third, ‘Trader Requirements’ for all consumer contracts, where the consumer and trader enter into a dispute, which they fail to resolve themselves. The trader must indicate to the consumer, a body approved by one of the competent authorities to deal with such a dispute and a further indication as to whether the trader is willing, or not, to use the indicated scheme.

Online Dispute Regulations
A subsequent piece of legislation, The Online Dispute Regulations, came into force in 2016 introducing, amongst other things, The Online Dispute Resolution Platform (ODR platform) this platform holds the list of all approved ADR bodies in the UK and across the EU.

Currently, the competent Authorities, approving ADR bodies in their relevant regulated sectors, are the Financial Conduct Authority, the Legal Services Board, the Civil Aviation Authority, the Gambling Commission, the Gas and Electricity Markets Authority, the Office of Communications and the Lead Enforcement Authority for the purposes of the Estate Agents Act 1979 (1).

CTSI operates as the competent authority across all non-regulated consumer sectors. This has seen the institute approve bodies across diverse sectors including waterways and byways, football, general retail, parking and ticket sales. The CTSI role is to carry out approval audits of applicant bodies, and ongoing monitoring of previously approved bodies, against the requirements as laid down in schedule 3 of the ADR regulations.

An on-site initial audit is conducted and a thorough inspection of the applicant’s website prior to approval. Then annual compliance visits are carried out to check continuing compliance and to view cases. Requirements that applicant bodies must meet, as laid down by schedule 3 include: Access to the ADR entity; Expertise, Independence and Impartiality; Conflict of interest Procedure; Fairness; Legality and Grounds to refuse to deal with a dispute.
The regulations define a trader as, ‘a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf’.

Trader requirements
Although some traders do not have to agree to use ADR for a consumer dispute (unless it is compulsory for them by law, by scheme membership or by contract) they are required by law to provide certain information about ADR to consumers.

Where a trader is considering a consumer complaint, then at the point where the trader’s internal complaint-handling procedure is exhausted they must provide the consumer with the following information: a statement that the trader cannot settle the complaint with the consumer; the name and website address of an ADR provider that could deal with the complaint, if the consumer wishes to use ADR; and whether the trader is obliged or prepared to submit to an ADR procedure operated by that provider (in other words, the trader has to give the consumer details of an ADR provider but does not have to agree to use ADR.)

The information must be provided in a ‘durable medium’ – for example, a letter or an email – and it will normally form part of the final ‘deadlock’ letter in response to a consumer complaint.

In addition, where a trader is subject to compulsory ADR, either by law or through the membership of a trade association, they must provide the name and website address of the ADR provider or scheme on their own website (if they have one) and as part of their general contract terms.
The trader provision has been criticised for being weak as it is only a voluntary mechanism in most cases. When the originating directive was first drafted and again at the implementation into UK regulation it was clearly felt that making ADR a requirement in all consumer disputes and, as the regulations do, placing most of the cost for this upon the trader was too big a burden to place upon business at that time. However, the UK Government has treated the regulations as a first step and seems to fully support the development of approved ADR in consumer sectors and others. It is likely that the trader requirement, and many of the other mechanisms of the current regulations, will be further evolved in the near future.

Regulation 19: Consumer information by traders

19(1) Where a trader is obliged to use alternative dispute resolution services provided by an ADR entity under (a) an enactment; or (b) the rules of a trade association to which the trader belongs, the trader must provide the name and website address of the ADR entity

  • On the trader’s website, if the trader has a website; and
  • In the general terms and conditions of sales or service contracts between the trader and a consumer.

19(2) Where a trader has exhausted its internal complaint handling procedure when considering a complaint from a consumer relating to a sales contract or a service contract, the trader must inform the consumer, on a durable medium:

  • That the trader cannot settle the complaint with the consumer;
  • Of the name and website address of an ADR entity which would be competent to deal with the complaint, should the consumer wish to use alternative dispute resolution; and
  • Whether the trader is obliged, or prepared, to submit to an alternative dispute resolution procedure operated by that ADR entity.

The trader information requirements set out in paragraphs (1) and (2) apply in addition to any information requirements applicable to traders regarding out-of-court redress procedures contained in any other enactment.

Review the 8 questions below, and when you’re ready, submit your answers here

1. When were the ADR regulations brought into force?

2. Name 3 types of ADR

3. Name 4 of the 8 Competent Authorities

4. What schedule does CTSI check approval against?

5. What additional information must a trader supply if they are obligated to use ADR?

6. In what no. reg is the ‘Trader Requirements’

7. Name 3 of the requirements that applicants must meet to be approved

8. What subsequent legislation was introduced after ADR and when?

Applicants who complete the module successfully will be given a certificate.

The test must be taken by March 31st 2019.

If you have any questions, please email training@tsi.org.uk

For more information on ADR, please contact CTSI on:
adrenquiries@tsi.org.uk or visit: www.tradingstandards.uk/consumers/support-advice.

For queries relating to Online Dispute Resolution, please visit:

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