New requirements for traders to tell consumers about Alternative Dispute Resolution (ADR) options

Posted on November 16, 2015

New regulations came into force earlier this year that affect the routine practices of many trading businesses.

The aim behind the regulations is to encourage wider participation in Alternative Dispute Resolution (ADR) procedures as an alternative to the often expensive and time-consuming choice of taking disputes to court.

What do the regulations require and who do they apply to?

The regulations require businesses to inform consumers about the ADR options available to them in the event of a dispute. Various ADR procedures exist to resolve disputes without the need to go to court including for example, mediation, expert determination, conciliation, adjudication and arbitration.

The regulations apply to traders that provide goods, services or online content to consumers. (They do not apply where businesses trade with other businesses and where consumers trade with other consumers).

The regulations also require that competent authorities be set up to certify proposed ADR schemes and to set the standards for such certification. Certain types of business, such as those in the energy and financial services industries, already have ADR schemes in place and many other businesses already participate in ADR schemes by virtue of their membership of trade associations.

Businesses who sell direct to consumers will not be forced to participate in ADR processes. In essence, the regulations are all about providing information to consumers to help them resolve disputes more easily.

What should traders do now?

Traders should check whether they are already required to use an ADR scheme under other legislation or through their trade association.

Those who are so required, must now provide the name and website details of the ADR provider both on their website and in the general terms and conditions contained in their sales or service contracts.

Traders who are not so required, must (where a dispute cannot be resolved using the usual complaints handling procedure):

tell the consumer (e.g. by email or on paper) that the trader cannot settle the complaint; and
give the name and website address of an ADR provider who can deal with the complaint if the consumer wants to use ADR; and
tell the consumer whether the trader will participate in that scheme.

The effects of non-compliance with the regulations

The requirement to comply with the regulations is mandatory and failure to do so could lead to a Trading Standards’ civil enforcement action and a court order for compliance. Breach of the court order could result in an unlimited fine or up to two years in prison.

Useful links

Here are some useful links to the regulations and further guidance:

Online dispute resolution

A further regulation dealing with ‘Online Dispute Resolution’ (ODR) will come into force in January 2016. The new law will help those who are dissatisfied with their online purchases of goods and services from traders within other EU member states to access dispute resolution procedures more easily and to avoid court proceedings.

If you want more information or guidance on whether or how you should be complying with these regulations, contact Christopher Burke: telephone 0161 684 6941 or email christopher.burke@pearsonlegal.co.uk

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.