We have previously highlighted that a new consumer law in the form of the Consumer Rights Act 2015 will come into force on 1 October 2015. To add to the burdens of retailers (and indeed other suppliers of consumer services as well), not only do they need to get up to speed with this new act now, but new regulations will come into effect on the same date requiring retailers to provide information about alternative dispute resolution (ADR).

So what is ADR? It is simply any process for the resolution of a dispute outside of court proceedings. In some cases, use of ADR is already compulsory. For example, in financial services disputes, consumers can insist that their complaint is decided by the Financial Ombudsman Service.

Retailers must, from the 1 October, provide consumers who wish to pursue a complaint beyond the retailer’s internal procedures with:

• a statement saying that the consumer’s complaint is unable to be solved internally;
• the name and website address of an ADR scheme that the consumer can use to solve the complaint if they so wish to use an ADR; and 
• a statement saying whether the retailer is legally compelled to or, if not, prepared to submit to the ADR scheme.

Bizarrely, this means that a retailer must give the consumer details of an ADR scheme but the retailer does not have to agree to use that scheme! That said consumer/media pressure may result in consumers having more confidence in doing business with retailers who agree to use ADR schemes to resolve disputes.

Other benefits of using an ADR scheme to resolve a dispute include:

• ADR procedures will usually be completed more quickly and cheaply than court cases and avoid expensive legal fees which normally cannot be recovered for any claim below £10,000;
• ADRs are often completely confidential and so can potentially avoid the risk of having damaged reputations through public proceedings; and
• more flexible outcomes can be achieved by ADRs because they have more discretion than courts on how and when to apply strict rules of law. This means that fairer solutions can sometimes be achieved by ADRs in comparison to the courts.

Whilst the Consumer Rights Act will enhance the rights of the consumer, it will inevitably lead to a greater number of disputes. The use of ADR schemes should play an important role in resolving these disputes by avoiding confrontational and costly court proceedings and hopefully facilitating resolutions that are fair, legal and in the interest of both parties.