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Introduction to ADR

When there is a dispute between a consumer and a trader, there are a range of options for resolving the dispute without going to court. These options can often be quicker and cheaper, and lead to a more satisfactory solution, than taking legal action. The law seeks to promote the use of 'alternative dispute resolution' (ADR) by ensuring that suitable options are available in all consumer disputes, and requiring traders to inform consumers whether they are willing to use ADR.

Further information can be found in the 'Alternative dispute resolution' Business in Focus guide.

What is ADR?

ADR is any process for the resolution of a dispute out of court. The simplest and most common form of ADR is direct negotiation, and this often leads to a solution. Where direct negotiation does not resolve the dispute, a range of other options may be available. In broad terms, ADR can take two forms:

  • in some types of ADR, the process allows the parties to the dispute to decide their own outcome, often with the help of a neutral third party. This is typically the case for direct negotiation, conciliation and mediation
  • in other types of ADR, the outcome is decided by someone who is not a party to the dispute. This is what happens in adjudication, arbitration and ombudsman schemes

Is ADR compulsory?

ADR is generally not compulsory for motor traders unless it is required by the rules of a trader's trade association or by the term of a contract. It may be compulsory, however, in relation to other services offered by a motor trader. For example, if the trader sells financial services (for example, offers a payment plan) then, under financial services legislation, the trader will, in general, be obliged to engage in ADR for such services. Such a trader will need to place details of the Financial Ombudsman Service (FOS) on its website and in its terms and conditions for its financial services.

Where ADR is not compulsory, businesses can, if they wish, voluntarily sign up to an approved ADR scheme.

A full list of CTSI-accredited ADR providers is maintained on the Chartered Trading Standards Institute website.

ADR information requirements

Although 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 to provide certain information about ADR to consumers.

When communicating the outcome of a trader's consideration of a complaint to the consumer, the trader must inform the consumer about any ADR or other arrangement that is available if the consumer is dissatisfied with that outcome. The ADR provider must be accredited by CTSI, be an exempt provider or be acting under special arrangements made by an exempt or accredited provider.

< Part 3. Consumer Contracts Regulations

> Part 5. Price Marking Order / Payment Surcharges Regulations

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