The ADR process

Benefits of ADR

ADR procedures are often quicker than court proceedings, which is of benefit to both businesses and consumers. The cost of ADR is usually free to the consumer; if there is a cost, it will be considerably less than when using the courts. Procedures are often completed in private and conducted confidentially, avoiding the risk of adverse publicity and the reputational damage that could arise from a court case.

In some types of ADR (such as mediation), the parties to the dispute decide the outcome themselves, rather than having it imposed on them.

ADR can be more flexible than strict rules of law, both in terms of outcomes and how it applies. It may, therefore, be possible to achieve outcomes that a court could not order, or to get a result that both parties think is fairer than that dictated by law.

ADR procedures can be less confrontational or adversarial than court proceedings. Not only can this reduce stress, it can also be an important consideration for a fruitful ongoing relationship.

Court protocols require parties to consider whether ADR will enable them to settle their dispute without resorting to legal action. There is an expectation that all parties will try everything reasonable to resolve matters before issuing a court claim. Traders and consumers may be required to give evidence to the court that they have considered using ADR. Solicitor's costs cannot normally be recovered for cases taken through the courts, even for the successful party. (In England and Wales, cases would go through the 'small claims track' of the County Court; in Scotland, the 'simple procedure' in the Sheriff Court would be used.)

Types of ADR

There are a variety of ADR mechanisms that businesses and consumers can access. Common forms include:

• mediation (a third party facilitating a resolution)
• arbitration and adjudication (a third party deciding a dispute)
• early neutral evaluation (a third party giving an informed opinion on the dispute)
• ombudsmen schemes

Criteria for ADR providers

The DMCCA sets out the criteria for ADR providers to become accredited for the purposes of the legislation.

To ensure that parties have confidence in the ADR process, all accredited providers must prove that they meet a strict set of criteria covering the following:

• providing consumers with accessible information about the kinds of ADR it carries out, the types of disputes it deals with, the procedures and costs
• readiness to carry out ADR
• expertise
• the facilities for consumers and traders to participate must be accessible
• fair ADR procedures. These must be easy to use, transparent, non-discriminatory and effective. Each party should have reasonable opportunity to express its point of view, and to consider the views, arguments and evidence put forward by the other party. Procedures should allow the parties to be represented or assisted by another person
• independence and impartiality. Action should be taken to identify and avoid any conflict of interest
• information for parties. The provider should keep those involved informed about the conduct and progress of any ADR being carried out. The parties should be notified of the outcome in writing and, where applicable, the grounds on which the decision has been reached

Information disclosed when applying for accreditation

When a new provider is applying for accreditation, it must disclose information to CTSI, including:

• the name, contact details and website address of the ADR provider
• the kinds of ADR carried out, and types of disputes it deals with
• the procedures, including:
  • time limits for referring disputes
  • whether ADR can be conducted orally or in writing
• the fees or costs payable by either party
• whether the outcome of ADR is binding
• the process for handling complaints

Within a month of the anniversary of accreditation, the provider must give further information to CTSI and place it on their business website (if they have one). This must be followed by annual updates. The required information includes:

• the number of requests for ADR received
• the percentage resolved in favour of the consumer, and the percentage in favour of the trader
• the number and percentage of requests for ADR categorised by type of complaint and the legislation alleged to have been breached
• the average time taken to resolve the dispute
• where the provider has made special arrangements, there should be information about the type of ADR conducted under those arrangements and the number of providers engaged
• the training given to persons carrying out the ADR

In the event of breaches of the requirements, CTSI has the power to revoke, suspend or place conditions on accreditations.

Exempt ADR providers and redress schemes

The DMCCA has two types of exemptions. The first is for statutory bodies or persons performing statutory functions. These are:

• Commission for Local Administration in England (also known as the Local Government and Social Care Ombudsman) and each Local Commissioner
• Consumer Council for Water
• Health Service Commissioner for England (also known as the Health Service Ombudsman)
• Legal Ombudsman
• Northern Ireland Public Services Ombudsman
• Office of the Independent Adjudicator for Higher Education (in relation to some of its functions)
• Parliamentary Commissioner for Administration
• Pensions Ombudsman
• Public Services Ombudsman for Wales / Ombwdsmon Gwasanaethau Cyhoeddus Cymru
• Scottish Legal Complaints Commission
• Scottish Public Services Ombudsman
• Civil Aviation Authority (currently being overseen by CTSI as the competent authority but will become exempt)

The second type of exemption is for redress schemes already regulated under other legislation. These are:

• an approved:
  • estate agents redress scheme
  • postal operators redress scheme
  • social housing ombudsman scheme
• approved public communications provider dispute procedures
• the Financial Ombudsman
• a qualifying:
  • letting agency work redress scheme
  • property management work redress scheme
  • redress scheme for the gas or electricity sector

Trader requirements

All traders are legally obligated to provide a consumer with certain information when communicating the outcome of their consideration of a complaint. They must inform the consumer about any ADR or other arrangement that is available if the consumer is dissatisfied with the outcome of their complaint.

Alternative arrangements are those available by virtue of an obligation on the trader imposed by legislation, the terms of the contract, or other contractual arrangements to which the trader is party. Neither the trader nor the consumer is obligated by the DMCCA to use the ADR procedure, but both should consider the implications of not doing so before issuing court proceedings. Traders should give the required information in a durable form, such as by letter or email.

For some business sectors, the trader must publish information about the dispute resolution scheme on their website and in their general contract terms. This is where it is required by a regulator, such as the Financial Conduct Authority, or by membership of a trade association. The schemes may also require the trader to agree to use ADR if the consumer wishes to, although the trader may have a choice of which scheme to join. This is the case, for example, for estate agents and telecommunications businesses.

Traders that do not provide the information required by the DMCCA leave themselves open to having action taken against them by local Trading Standards services under Part 3 or Part 4 of the DMCCA. For more information on Trading Standards' powers, see 'Trading Standards: powers, enforcement and penalties'. In addition, CTSI, as a competent authority, holds enforcement powers as delegated by the Secretary of State.

A full list of approved / accredited ADR providers is maintained on the CTSI website. Some of the schemes cover specific sectors or specific types of dispute, while others have broad coverage. This means that businesses should be able to identify an accredited provider, whatever the nature of their business and their dispute.

The following are some examples of how ADR can work in practice. Please note that the company names given below are fictional.

Summary

ADR can be a powerful way of resolving disputes quickly and without recourse to the courts.

All traders that make contracts with consumers must, when communicating the outcome of their consideration of a complaint, inform the consumer about any ADR or other arrangement that is available if the consumer is dissatisfied with the outcome.

While it is not always mandatory, many trade bodies require their members to join ADR schemes. Traders that are obligated to use ADR by a code of conduct (whether through membership of a trade body or by a regulator) must also provide the name and web address of the ADR provider or scheme on their own website (if they have one) and as part of their general contract terms.

ADR schemes are audited to ensure compliance with a list of criteria.

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