Helen Dewdney looks at how the Alternative Dispute Resolution (ADR) system for resolving consumer complaints is in danger of collapse.

Ombudsman omnishambles failings in their oversight

The new report makes a total of 13 recommendations.

Government and regulators continue to fail on resolving consumer disputes

The Alternative Dispute Resolution (ADR) system for resolving consumer complaints is broken and in danger of collapse. This is one of the conclusions of a damning new report released last month. The report reveals that Government bodies have not heeded the warnings of an earlier report, Ombudsman Omnishambles (OO), and that regulators seem to have been complicit in making the situation even worse.

The report, “More Ombudsman Omnishambles - 20 months on” (MOO), written by consumer campaigners Helen Dewdney and Marcus Williamson, follows on from their June 2016 report that exposed serious failings in the UK ADR system. 

The original report highlighted the apparent failings of the Chartered Trading Standards Institute (CTSI), Civil Aviation Authority (CAA) and Ombudsman Association (OA) in their approvals and oversight of organisations providing alternative dispute resolution for consumers and business. 

The CTSI continues to approve providers in all sectors, particularly retail, significantly complicating the situation for consumers. For example, at the end of last year, South Yorkshire Trading Standards and Kent County Council were approved for ADR in retail sectors which are already well covered, including furniture and garages. This is despite the fact that in February 2018 the Government announcing that it was seeking to reduce the number of ADR providers in property to one, because of perceived consumer confusion. Ombudsman Services: Property, operating since 2007 announced that it was going to withdraw from the sector and will not be taking on new cases and will fully withdraw by 6 August 2018. It also cited consumer confusion and the proliferation of providers as the reason for doing this. The CTSI seems to be at odds with the Government.

In the retail sector there are a number of providers of alternative dispute resolution. For furniture retailers the Furniture Ombudsman was established over 25 years ago to specialise in the sector. However, in January 2015 The Retail Ombudsman started and covered all goods, including furniture. This was a move that was criticised in the original OO report and later by the OA. 

Consumer Dispute Resolution Limited (CDRL) (trading as RetailADR, AviationADR, UtilitiesADR and CommsAdr and previously known as The Retail Ombudsman) does not list the members of its schemes. South Yorkshire Trading Standards and Kent County Council also do not, and it is not clear whether they are running services for members of the public and/or businesses in their locality, or country wide. All appear to provide services on a pay as you go basis. This means that no yearly membership fee is paid and businesses can choose the cases on which they engage. This seems to be a disadvantage for businesses, as those who are paid up members may well find themselves subsidising those who are not. This method is also not allowed under OA rules, as it is deemed to be poor practice.

The latest report demonstrates how the CTSI and the CAA are not verifying information given by providers in their annual reviews and in the media. In order for an ADR provider to be an Ombudsman, it must meet certain standards and be a member of the Ombudsman Association. The report highlights that the OA has higher standards for approving an ADR provider, compared with the CTSI. For example, at its May 2017 meeting the Ombudsman Association Executive Committee decided not to revalidate TRO. Eight detailed reasons were provided which included lack of transparency, poor governance, lack of accountability, use of company logos without permission and provision of inaccurate and potentially misleading information. 

When asked what monitoring the CTSI has undertaken, Jane Negus, Executive for Services Directive and ADR, said they “… use the reports that they [ADR providers] produce in line with schedules 5 and 6 of the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 to ensure that they are adhering to the criteria in the regulations. This includes visits where data is looked at in detail, their mechanisms for recording data, sampling and how they formulate their annual figures.” However, the MOO report identified a number of issues regarding figures in reports. 

The authors of both reports, Marcus Williamson and Helen Dewdney, are appalled at what they have discovered during this research. Dewdney says: “Consumers are confused by the whole ADR sector. Public money – and consumers’ time - is being wasted because of inadequate monitoring and the approval of organisations which shouldn’t be providing services to the public or which simply aren’t necessary.”

Williamson and Dewdney are supporters of the ADR process and indeed believe it should be mandatory. They encourage all traders to join a relevant scheme, but urge businesses to thoroughly investigate an ADR’s history of reviews, reports and current members before deciding which scheme to join. Businesses would be well advised to read the report before choosing or renewing membership with an ADR provider.