4 things you need to know about the Consumer Disputes Regulations if you act for an ADR service provider

4 things you need to know about the Consumer Disputes Regulations if you act for an ADR service provider

9 julyThe Alternative Dispute Resolution for Consumer Disputes (Competent Authorities) Regulations 2015 (SI 2015/542) have been introduced so as to improve the availability and quality of ADR services in consumer disputes, with the in-force date for the relevant regulations being 9 July 2015.

In the second of a two part series, we consider the Regulations and what the Regulations mean for those acting for ADR service providers. The first post, which concentrated on those acting for traders, can be found here.

The Regulations achieve their aims by:

  • Designating competent authorities who will vet and monitor approved ADR entities offering ADR services in certain consumer sectors (an example being the Financial Conduct Authority which is the relevant competent authority for the Financial Services Ombudsman which provides ADR services in the consumer financial sector ) and by the intended creation of a ‘residual ADR scheme’ to be available to businesses that are not obliged or committed to using another ADR scheme
  • Requiring traders to provide certain information as regards the availability of ADR services for resolving disputes brought by their consumers

4 things you need to know if you act for an ADR service provider

1. When are the Consumer ADR Regulations relevant to an ADR provider?

There is no requirement for existing ADR providers to become approved ADR entities. However, you may find that if you do not register and obtain approval, then other ADR providers operating in your industry sector who do seek and obtain approval, will find disputes being allocated to them in preference to your services.

Certainly, the understanding is that traders will be signposting consumers to approved ADR entities on their websites/in their sales and services contracts and compelled to do so in certain regulated industries.

2. How do you gain approval and listing as an ADR entity under the Regulations?

You will need to apply to the relevant competent authority for your industry sector. The Regulations have identified the competent authorities in certain regulated industries (note, healthcare services are excluded from the Regulations), namely:

  • the Financial Conduct Authority (FCA) is a competent authority and the relevant competent authority in relation to ADR services offered by the Financial Ombudsman Service (FOS)
  • the Legal Services Board (LSB) is a competent authority and the relevant competent authority in relation to ADR services offered by the Office for Legal Complaints (the Legal Ombudsman has already submitted its application, see [LINK TO BLOG 1 PIECE???]
  • the Secretary of State is the relevant competent authority in relation to ADR services offered by the Pensions Ombudsman and for approving and monitoring an ADR applicant or ADR entity offering ADR services in the pensions industry

Subject to the above,

  • the Civil Aviation Authority
  • the Gambling Commission
  • the Gas and Electricity Markets Authority
  • the Office of Communications
  • the lead enforcement authority for the purposes of the Estate Agents Act 1979

are each a competent authority in relation to the area for which they have regulatory responsibility or for which they have oversight under any enactment and are the relevant competent authority in relation to an ADR entity or ADR applicant which offers ADR services in that area.

The Government intends to establish a residual ADR scheme for non-regulated industries. Further information on this is awaited from BIS.

A template application form can be obtained from the Chartered Trading Standards Institute.

3. What are the requirements to become an approved ADR entity?

Approval will only be awarded if the ADR applicant satisfies the relevant competent authority that it meets the criteria set out in regulation 9 and schedule 3 of the Regulations. The requirements centre around the ability of the ADR applicant to satisfy the relevant competent authority as to the scope, structure and organisation of its ADR functions so as to ensure impartiality, transparency and fairness. A particular requirement is to demonstrate what conflict of interest procedures are in place.

4. What happens once an ADR entity is approved?

Having gained status as an approved ADR entity, your name will be added to a list maintained by the Secretary of State.

The relevant competent authority will be responsible for continued monitoring of the efficacy of the services you provide. This will entail annual reporting on your website of information regarding the scope, nature and number of disputes you have handled and any specific issues that have arisen. Every two years you will be required to submit similar information to your relevant competent authority. Where an approved ADR entity fails to meet any of the requirements for continued monitoring and the breach is sufficiently serious and is not remedied on notification by the relevant competent authority the ADR entity can have its approval status withdrawn and its name removed from the approved list.

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About the author:
Ruth specialises in general corporate and commercial dispute resolution with particular experience in shareholder disputes, fraud and warranty claims. Ruth trained and qualified at Berwin Leighton Paisner LLP (now Bryan Cave Leighton Paisner LLP) where she remained in practice for ten years. Her work has involved project managing large-scale cases to trial in the chancery and commercial courts. Ruth was actively involved in in-house training with a particular focus on all aspects of evidence gathering and production, including authoring a user-manual on E-disclosure. She is also a contributor to the New Law Journal.