Legal Article - Business Law

Alternative Dispute Resolution (ADR) – The Facts


ADR is all about resolving disputes with your customers without going to court. Although ADR is the official term in regard to these Regulations, it is sometimes also referred to as mediation, conciliation or arbitration.

In 2013 the EU published the European Directive on ADR. The main objective of this Directive was to ensure that all member states offer ADR as a simple, fast and low-cost out-of-court solution to disputes between consumers and traders.

For us in the UK, this Directive led to The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and information) Regulations 2015 and this puts certain requirements on our traders from 1 October 2015 (these are in addition to the new rules set out in the Consumer Rights Act 2015 which also come into play from 1 October 2015).

For our traders, there are two information requirements which are set out in Part 4 of the Regulations. The first requirement applies to all traders but the second only applies to those who are members of a Trade Association which requires them to participate in ADR.  It is an odd feature of these Regulations that although all traders are legally required to advise consumers about ADR, only those whose membership of a Trade Association requires them to do so, are required to participate.

The first information requirement is for all traders and the requirement is triggered following a complaint from a customer. So, if you receive a complaint from a customer and you cannot reach an agreement, you must, on a durable medium (usually an email or a letter):

  • Advise the customer that you cannot settle the dispute (you are at deadlock),
  • Advise the customer of the name and website address of a certified ADR provider, and,
  • Advise if you are either required to take part in ADR or if you are not required, say whether you will voluntarily participate.
 
The second information requirement applies only to those dealers whose membership of any Trade Association requires them to engage in ADR.

These dealers have to comply with both the first and also the second information requirement which is to have certain information available on their website and in their sales contracts.

Traders who are obligated to use ADR must provide the name and website address of the competent and certified ADR Provider they are required to use. Dealers will need to check with their Trade Associations to find out which Provider they are required to use. If the Trade Association does not have an associated ADR Provider, dealers can check the up to date list of providers with Trading Standards who are the body responsible for approving and regulating the ADR Providers. Details of all approved bodies can be found at: http://www.tradingstandards.uk/advice/ADRApprovedBodies.cfm

We recommend using our ‘Your Legal Rights Explained’ booklet which has been updated to include details of ADR. It is a simple way to help you to meet the legal requirements of this new Regulation. The booklet also provides you with a written complaints procedure which is required by the Financial Conduct Authority (FCA) as part of your Consumer Credit Licence (CCL) and also under Schedule 1 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

If you are a member of a Trade Associations that requires you to use ADR you are required by law to provide this information on your website and sales documentation.  However, every dealer will be required to provide the first information in any final offers they may make to their customers and it would good practice to include the second in your website terms and conditions.

Lawgistics Members can download and use the suggested wording for the deadlock letter (final offer) and the additional ADR wording for website terms and conditions from their online account or call the Legal Team for further assistance.

Author: Nona Bowkis

Published: 24 Sep 2015

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