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ADR: A Government consultation

On 20 June 2021 the Government finally published its consumer paper for consultation titled Reforming Competition and Consumer Policy. The closing date is for responses to the consultation is 11.45am on 1 October 2021.

The document is 147 pages long! So, I am going to do a summary/opinion piece on areas of the consultation.

I will start with Alternative Dispute Resolution (ADR). It can be complicated but over the last 6 years I have been recognised in the consumer world for my expertise and knowledge in the area and often get called upon in the media to talk about ADR due to this.

See ADR – all about it for World Ombudsman Day lists all my work in this area.

See Reviews: A Government Consultation and Subscriptions: A Government Consultation for response on subscription traps.

ADR falls within the section of Consumer Law Enforcement.

Marcus Williamson and I co-wrote two research reports on Alternative Dispute Resolution (ADR).

Report cover CDRL, CTSI, CAA, OA, Dean Dunham,The first was Ombudsman Omnishambles:  Serious unresolved issues affecting the operation of the ombudsman ADR system in the UK. (OO) in June 2016

The second was More Ombudsman Omnishambles: The UK ADR landscape 20 months on… in February 2018 (MOO). These were both highly critical of the Chartered Trading Standards Institution (CTSI) and of Civil Aviation Authority (CAA) in particular for their approval and monitoring of ADR schemes. Many of the issues raised in both these reports remain unresolved.

The Government is looking at examining ways to “mainstream” ADR, so it not seen as an alternative to court but becomes an integral part of the justice system. It currentlu aims to increase the scope of ADR and the rate of consumer disputes being satisfactorily resolved.

The consultation is looking at responses to three areas.

Summary of one section of the Reforming Competition and Consumer Policy consultation:

“Government believes a well-functioning ADR system can make markets work more effectively and drive economic growth, as it increases consumers’ confidence in spending and generates higher trader compliance with the law. However, responses to the Consumer Green Paper suggest that a number of improvements need to be made to improve the quality and scope of ADR so that it delivers for more consumers and businesses in all markets. In this chapter, government is seeking views on three specific improvements that were highlighted by respondents:

Improving consumer awareness and signposting – the current landscape for accessing redress is confusing and the process varies across markets. This is dissuading consumers from seeking private redress and enforcing their consumer rights.

Responses to the Consumer Green Paper said that consumers still find it difficult to understand their redress options, make the right choice for them and navigate the routes to resolving their problem, particularly if they are vulnerable.”

“Speeding up access to ADR  – In regulated markets, the majority of disputes are resolved within four weeks, but most regulators have typically set an upper limit of eight weeks for businesses to resolve complaints before consumers are entitled to take a dispute to ADR.

Government is looking for views on whether regulators should aim to set a significantly lower threshold for consumers to exercise their right to access ADR and if so whether exceptions could or should be made to allow more time to resolve complex cases.

“Improving the take-up of ADR by businesses in non-regulated markets – Business participation in ADR is particularly low in non-regulated sectors with a high number of SMEs and microbusinesses. This is concerning if those sectors are also ones where consumers are experiencing high levels of harm.”

The following is summarised from the policy. Pages 116 – 127 in the section titled “Supporting consumers enforcing their rights independently”

Improving Alternative Dispute Resolution

“Government proposes to require that all providers of consumer ADR are assessed and approved for their ability to provide an ADR service. Currently there are numerous non-accredited and unsupervised providers that offer dispute resolution on an informal basis alongside accredited providers.

Mandatory approval by the Competent Authority would mean that all providers operate to a common set of quality standards and oversight.”

It intends to strengthen the minimum service expectations of all ADR providers, focusing on four key principles to improve the quality of ADR – “neutrality, efficiency, accessibility, and transparency”.

“Government proposes to amend the ADR regulations, building on its existing framework to incorporate additional requirements for ADR providers, both as part of their initial accreditation and as part of their service provision to consumers and businesses. “These would include strengthening the accreditation process through the introduction of a ‘fit and proper persons’ test for key personnel to ensure that businesses owners, officers and senior management are suitable people to undertake those roles.”

It is generally mandatory for traders to participate in ADR schemes in the regulated sectors. For sectors where participation is voluntary, there is little engagement for a number of reasons. In the unregulated sectors, house and garden maintenance services, vehicle maintenance and repair services, and used cars are the sectors where consumers spend the most money so can receive the most harm.

“Government is considering a charge of £10-20 to consumers, with this being recoverable from the business if their case is upheld. There is a precedent for this in the aviation sector. “To address these concerns and deter frivolous or low value complaints, government is seeking views on whether ADR providers should be able to implement a lower limit on the value of claims. This would be balanced to ensure only higher value claims are in scope but not to significantly restrict consumers’ access to ADR.”

“Government is looking at incentivising businesses and consumers to use ADR on a voluntary basis. Responses to the Consumer Green Paper and further stakeholder engagement, showed that mandating ADR in would be significantly more effective than voluntary measures in ensuring access to affordable redress. Government is looking at making participation mandatory in the motor vehicles sector (to include the supply of new and used vehicles and servicing and repair) and in the home improvements market (such as roofing, glazing, plumbing work, or the fitting of flooring, kitchens, or bathrooms).”

“Government is considering requiring businesses in these sectors to pay for ADR on a pay per use basis but recognises that some businesses might find it more cost effective to pay an ADR provider on a subscription basis.”

“The UK has an established regime for addressing collective consumer harm and enabling consumers to gain collective redress when consumer law has been broken. This covers both public collective redress procedures, whereby regulators and the CMA can seek redress on behalf of consumers. Enforcers, such as the CMA, seek compliance with consumer law rather than taking representative legal action on behalf of consumers. The Consumer Rights Act 2015 strengthened routes for public enforcers to seek collective redress and government forsees the changes to make it easier and quicker for bodies to obtain redress on behalf of consumers.”

“Government is considering a range of options that will incentivise compliance and encourage businesses to use ADR. It is also looking at options that will disadvantage businesses that refuse to engage in an ADR process if the consumer eventually needs to take them to court.”

Helen Dewdney The Complaining Cow responses to the consultation Download

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CMA steps in where the CAA fears to tread

CMA investigates and takes enforcement action

The Civil Aviation Authority (CAA) should be the regulator for air transport in the UK. However, it is increasingly clear that the Competition and Markets Authority (CMA) is doing the CAA’s job for them.

During the course of this year the CMA has taken action against a number of companies which were not giving full refunds where they were owed due to coronavirus cancellations.

This includes: Sykes Cottages and Vacation Rentals in June, Bijou Weddings Group in September and yesterday (15 December) the announcement that following CMA action, LoveHolidays. The company had committed to pay out over £18 million to customers waiting for money back after their holidays were cancelled due to coronavirus.

CAA: A regulator that fails to regulate

In July the CAA reported on its airline refunds review. A number of airlines were found to be hugely failing in their legal duties and they gave commitments to the CAA to resolve the matters. For example, on 3 July, Ryanair published a set of commitments on its website about timescales for processing cash refunds.

Ryanair confirmed that 90% of its backlog would be cleared by the end of July 2020 with all refund claims made in April to be processed by 15 July and most of the claims made in May to be refunded by the end of July. This statement has not been updated and just a quick glance on Twitter and in Facebook groups dedicated to Ryanair complaints shows that Ryanair customers are still waiting for refunds.Ryanair aeroplane in sky Dean Dunham AviationADR CEDR

Commenting on the review, Richard Moriarty, CAA Chief Executive said: “The airlines we have reviewed have responded by significantly enhancing their performance, reducing their backlogs, and improving their processing speeds in the interests of consumers.

“There is still work to do. We have required commitments from airlines as they continue the job of paying customer refunds. Should any airline fall short of the commitments they have made, we will not hesitate to take any further action where required.”

However, the CAA has failed to take any further action, appearing to believe that no further action is required.

CAA defers but the CMA brings action

It would appear that the CMA disagrees. Today, 16 December, the CMA announced that it was investigating whether airlines have breached consumers’ legal rights by failing to offer cash refunds for flights they could not lawfully take.

The CMA says “The investigation will consider situations where airlines continued to operate flights despite people being unable lawfully to travel for non-essential purposes in the UK or abroad, for example during the second lockdown in England in November.”

The CMA is aware that, in some cases where flights were not cancelled, customers were not offered refunds, even though they could not lawfully travel. Instead, many were offered the option to rebook or to receive a voucher.

How the CMA will work with the CAA

The CMA says that it will be working closely with the UK Civil Aviation Authority as it progresses its investigation.  Its press release continues:

“While the Civil Aviation Authority (CAA) leads on consumer protection in the airline sector, the CMA has undertaken extensive action in connection with cancellations and refunds during the pandemic and is well placed to support the CAA on these issues. The CMA and the CAA continue to work closely and share the same enforcement powers to tackle breaches of consumer protection law.

The CMA will now be writing to a number of airlines requiring information to understand more about their approaches to refunds for consumers prevented from flying by lockdown.

Following a careful analysis of this evidence, the CMA then will decide whether to launch enforcement action against individual airlines.”

CMA forced to act on airlines failures

It is quite clear that the CMA has had to step in and walk where the CAA fails to tread.

Paul Smith, Group Director of Consumers and Markets at the CAA, said :

“It is right that consumer rights are upheld throughout this period and we welcome this investigation from the CMA, which follows our review into airline refunds earlier this year. The CMA has been leading on a broad range of issues arising during the coronavirus pandemic and we will continue to work closely with the CMA in support of this investigation.”

This defensive stance from the CAA makes the regulator appear ridiculous. As the CMA states, it has the same enforcement powers as the CAA. But the CAA has done nothing to enforce anything since their review earlier this year. Airlines continue to flout the law and the CAA appears to have done nothing to ensure that airlines have kept to their June commitments.

CAA compared with other regulators

No other regulatory body needs another organisation to step in to support their enforcement work. The other regulators, such as Ofgem (Energy), Ofcom (Telecoms) or the Office of Rail and Road (Transport) are able to enforce the law themselves.

Future for the CAA and ADR

So, why does the CAA need help? Because it is ineffective and unwilling to take on the airlines face to face. Has CMA simply had enough of watching this farce unfold?

Hopefully this action by the CMA will shame the CAA into taking further action by itself.

It is the job of the Civil Aviation Authority to investigate airlines but it has continued to take no action. The CAA has told me in the past:

“Should any airline fall short of the commitments they have made, we will not hesitate to take any further action where required.”

However, time and time again it has not done so. The CAA has shown itself to be not fit for purpose. Instead it is finding in favour of airlines and continuing to allow them to behave illegally. The CAA has shown itself to be not fit for purpose. The CAA needs to use its enforcement powers to revoke airline operating licenses where airlines do not comply with the law.

Aeroplane in sky with clouds AviationADR Dean Dunham, CEDR, CAA

Further information:

A new Chairman started at the CAA on 1 August 2020. But unfortunately the new chair, Sir Stephen Hillier, has been ineffective in tackling airlines that are continuing to break the law on consumer refunds.

CAA launches consultation and tells no-one… launched a consultation on Alternative Dispute Resolution (ADR) but didn’t tell any stakeholders, as Which? calls for a single Ombudsman in the sector.

Report cover Dean Dunham, CDRL, CTSI, CAA, OA,

Crowds of people with report covering OA, CTSI, CA, CDRL, Dean Dunham & others

More Ombudsman Omnishambles report which looked at approval and monitoring of ADR schemes and followed Ombudsman Omnishambles which looks at the failings of regulatory bodies, including the CAA.

How approval bodies are failing to properly approve and monitor Alternative Dispute Resolution -

Ryanair tops CAA refund complaints

Getting help for Coronavirus cancellation claims and shopping help and advice for getting refunds and redress