November 2015 – Sorting Out Consumer Disputes

Author: Mitchells Roberton
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  • The Consumer Rights Act 2015 came into force last month. It is largely the result of a review of the law about consumer rights conducted jointly by the (English) Law Commission and the Scottish Law Commission. The review culminated in a Joint Report, with recommendations for reform and clarification of the law, published in 2009.
  • In the News Release issued when the Report was published those heading up the review said:

“We believe that the right to reject [goods] should be retained in the UK as a short-term remedy of first instance. It is a simple, easy to use remedy which inspires consumer confidence. 

Consultees told us that the only problem with the right to reject is uncertainty over how long it lasts. We recommend that in normal circumstances, a consumer should have 30 days to return faulty goods and receive a refund, with flexibility built in for special circumstances such as perishable goods, or goods which both parties know will not be used for some time.”

  • And:

“Legal advice is rarely sought for consumer disputes so it is particularly important that the law on consumer remedies is easily understood, remembered and applied. Our proposals will result in a considerable simplification of the law. 

In addition to our proposals on the right to reject [goods], we also recommend that the Government should take steps to ensure that consumers have a much better understanding of their legal rights.”

  • That gives a flavour of the aim of the Act. But the Act is not short: it runs to 101 sections and 10 schedules. This Note does not aim to summarise the Act. The Act is mentioned primarily as background to the separate Regulations concerning the resolution of consumer disputes which also came into force last month: the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (SI 2015/542).
  • These Regulations are not in fact made under the 2015 Act but are the product of a European Union review of consumer law overlapping with the review of consumer law by the Law Commissions here. This Note focuses on those Regulations (made under European Directive (2013/11/EU)). But the full title of the Regulations is quite a mouthful and is shortened here to “the Resolution Regulations”.

The Resolution Regulations 

  • The Explanatory Memorandum to the Resolution Regulations sets the scene:

 “Consumers are not always confident that if they experience problems when purchasing goods or services from a trader, that that problem will be resolved. 

Often the only option is to seek redress through the Courts, which can be an expensive, lengthy and daunting process which puts many consumers off pursuing redress. 

[The “Alternative Dispute Resolution” (“ADR”) procedures under the Resolution Regulations] provides a means for consumers to resolve their problems outside court. The aim of the [Resolution Regulations] Directive is to encourage growth and consumer confidence across the European Union by increasing access to ADR in relation to contractual disputes regarding the sale of goods or provision of services.”

  • In a nutshell, the Resolution Regulations provide that once a business’s internal complaints process has been exhausted, the business is required to give the consumer details of a certified ADR provider and notify the consumer as to whether the trader is willing to use ADR in order to resolve the issue.
  • The business does not however have to use ADR unless it is in a business sector where existing legislation makes ADR compulsory: for example, the Financial Conduct Authority for financial sector disputes and Ofgem for energy sector disputes.
  • In more detail, on this particular aspect,  Regulation 19 provides:

“(1) Where, under an [Act], rules of a trade association, or term of a contract, a trader is obliged to use an alternative dispute resolution procedure provided by a [recognised ADR body] the trader must provide the name and website address of the [body] –

(a) on the trader’s website, if the trader has a website; and

(b) in the general terms and conditions of sales contracts or service contracts of the trader, where such general terms and conditions exist. 

(2) Where a trader has exhausted its internal complaint handling procedure when considering a complaint from a consumer relating to a sales contract or a service contract, the trader must inform the consumer, on a durable medium—

(a) that the trader cannot settle the complaint with the consumer;

(b) of the name and website address of an ADR [body] that would be competent to deal with the complaint; and

(c) whether the trader is obliged, or prepared, to submit to an alternative dispute resolution procedure operated by an ADR [body]…” 

  • Under the Courts Reform (Scotland) Act 2014 we will see, early next year, the introduction of a new simple procedure in the Sheriff Court which will be conducted by “Summary Sheriffs”. It will be interesting to see whether consumers will take advantage of the new simple procedure to bring consumer disputes to court or whether the ADR procedures under the Resolution Regulations will be preferred.

Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Paul Neilly: paul@mitchells-roberton.co.uk

 

 

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