Earlier this year, we published research commissioned by Citizens Advice investigating whether the current provision of Alternative Dispute Resolution (ADR) in the UK met consumer needs. In this post we provide a brief summary of our findings.
What the research is about
Our research is about the help available to consumers who have experienced a problem with a business that they have been unable to resolve on their own. Some of these problems end up in the small claims courts, but increasingly consumers can turn to Alternative Dispute Resolution (ADR) schemes.
Our final report of the research does 3 things.
- It provides an up-to-date map of ADR schemes available to consumers in the UK;
- It presents a detailed comparative assessment of a small selection of these schemes;
- It sets out consumer insights drawn from interviews with consumers who have used ADR.
Research in this area comes at a crucial time. There have been longstanding criticisms of
ADR provision for consumers and there is wide consensus that the system is incoherent and confusing. This is, therefore, an opportune time to be thinking about how to ensure that ADR meets consumers’ needs and serves their interests.
Three core messages arise from the research.
The ADR landscape is confusing for consumers. There are now more ADR schemes than ever. While this is not a problem in itself and has improved coverage, it has further added to the complexity facing consumers. And there remain significant gaps and overlaps. Where there are gaps, consumers are left without remedy. Where there are overlaps, consumers are left confused. The wide variety of ADR processes and inconsistent terminology are also a source of confusion.
The current ADR landscape is not designed with consumers’ needs in mind. Except where ADR is mandatory, businesses have the power both to decide whether to take part in ADR and, if so, which ADR scheme to use. In some sectors, multiple ADR schemes compete with each other. The result is that consumers’ needs are not being met. Often consumers do not know where to complain.
Improving ADR provision is hampered by a lack of good quality data. Simply describing the UK’s ADR landscape is a complex task. Information is not readily
available and there is significant variation between ADR schemes in terms of transparency. Lack of good quality comparative data makes tackling the shortfalls in ADR provision more difficult. It also means that feedback loops that might improve business practice are less likely to be present. Overall, it means that ensuring consumer needs are met is difficult to assess and assure.
To address the areas for improvement we identified in this research, we made 6
Recommendation 1: mandatory ADR should be extended across all consumer sectors
Significant gaps continue to exist where businesses choose not to sign up to an ADR scheme. The government should adopt the principle that participation in ADR should be mandatory across all consumer sectors, regardless of the sector involved or the value of the claims consumers are making. This should be monitored and reviewed if credible evidence emerges that the system is being abused. There are certain areas that may require special attention in relation to this recommendation including the private rented sector and consumer-to-consumer transactions.
Recommendation 2: in regulated sectors, ADR should be limited to 1 provider in each sector.
In regulated sectors, it is particularly important that the different actors (regulator, consumer advocate and ombudsman) work closely together. Therefore we recommend that there should be only 1 ADR provider per sector. The potential benefits of competition in terms of raising standards can be maintained, for example by regularly inviting tenders for the contract to provide the ADR scheme.
Recommendation 3: in non-regulated sectors, BEIS should take steps to make the ADR landscape easier for consumers to navigate.
This can be done in a way that tackles gaps and overlaps in the ADR landscape at the same time as preserving standard-raising competition. In non-regulated areas, should ADR become mandatory, we recommend that the Department for Business, Energy and Industrial Strategy (BEIS) work with industries and key stakeholders to make ADR more user-friendly. BEIS should consider whether having 1 ADR provider per sector is the right solution for consumers. As a minimum, there should be a single branded entry point for consumers wishing to make a complaint, with consumers shielded from
Recommendation 4: ADR should be branded more consistently.
There is a wide variety of ADR types and processes available and a lack of clarity over terminology. In order to consolidate ADR as a key means by which consumer disputes are resolved, ADR needs to develop a clear, common, and well-known brand. Recent years have seen an increase in the number of ADR schemes branding themselves as ombudsman schemes. This may provide a starting point for a more consistently branded ADR offer.
Recommendation 5: ADR schemes should harmonise their practices wherever it is in the consumer interest to do so.
BEIS should work with the industry and key stakeholders to harmonise practice across ADR schemes. For example, consumers should be able to expect similar levels of procedural fairness and support in making a complaint regardless of the ADR scheme they are complaining to. The diversity of process and practice between ADR schemes is confusing for many consumers. While there is no need for identical processes to operate, without some common approaches and terminology, it will not be possible to develop common standards, benchmarks, and reporting requirements.
Recommendation 6: a single authoritative body should be tasked with setting common performance standards, benchmarks, and reporting requirement for all ADR schemes.
While some positive developments in performance standards are already taking place, there is a need for more action. In particular, agreed benchmarks and common reporting requirements across all ADR schemes would make it easier to compare performance and raise standards. Having a single authoritative body with oversight of the ADR sector would also ensure that quality is maintained.
Since our report was written the UK has seen a general election and continues to experience significant uncertainty as a result of the Brexit process. The UK’s post-Brexit consumer policy is unclear and the extent to which this aspect of consumer policy will be prioritised must be in doubt. Nonetheless, the issues we have identified in this research are unlikely to be remedied without significant government intervention.
The full report of the research is available to download here,