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Consumer rights reform brings new ADR requirements for businesses

Consumer rights law within the EU is currently under reform. As part of this, the obligations placed on businesses regarding consumer dispute resolution have recently been changed. 

These changes were brought about by the European Directive on alternative dispute resolution (the ADR Directive) and the European Regulation on online dispute resolution for commercial disputes (the ODR Regulation). They will affect all businesses selling goods and services or digital content to consumers within the UK, with the exception of health professionals.

Below we set out what’s changing, what the impact will be and how retailers can ensure they comply. 

Application of the ODR Regulation and ADR Directive

The ODR Regulation is directly applicable within the UK and applies to online sales and services arising within the EU.

The ADR Directive has been recently implemented through a number of UK regulations. 

The majority of requirements imposed by the ODR Regulation and the UK regulations came into force on 9 July 2015. This is with the exception of some business information requirements which will take effect on 1 October 2015 and in January 2016. 

What’s changed?

The changes make alternative dispute resolution (ADR) more readily available to consumers. This gives them a greater opportunity to settle disputes outside of court. 

Under the new regulations, certified ADR providers were made accessible to all businesses selling goods and services to consumers within each sector from 9 July 2015.

The regulations do not make it mandatory for traders to participate in ADR. But, they do mean that, from 1 October 2015, most businesses offering goods and services directly to customers will need to provide consumers with certain information relating to ADR. Businesses will be required to:

  • direct consumers to certified ADR providers where disputes cannot be resolved in-house; and
  • provide confirmation of whether they intend to use that ADR provider as a means of resolving the dispute.

Online traders must provide this information on their websites. From January 2016, businesses selling goods online will also be required to provide a link on their website to the EU Commission's Online Dispute Resolution Platform. 

What steps should businesses take?

The regulations will be enforced by the Trading Standards Institute which has the power to apply to the court to make an order for compliance. Failure to comply with the court order could result in criminal sanctions.

Businesses likely to be affected by these changes should review the information they provide to consumers in respect of complaints and dispute resolution ahead of the October deadline.

For some businesses, the use of ADR may already be a mandatory requirement, for instance due to a pre-existing statutory requirement or commitment to using ADR. This means that the new information requirements are likely to have little impact. But other businesses will need to decide whether or not they intend to use ADR for disputes that cannot be dealt with internally. Careful consideration will need to be given to the financial implications of committing to ADR and also to the message that this will send to customers.  

If you would like to discuss the implications of the new regulations or require any further advice, please contact Duncan Reed, or any other member of the TLT Regulatory team.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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