The ABCs of ADR (Alternative Dispute Resolution)

The introduction of ADR Regulations has opened up opportunities for traders and consumers to have more access to ADR schemes than was the case previously. The regulations have also been designed to give traders and consumers confidence that when they use an officially approved ADR body, they are guaranteed a fair outcome.

How Does This Work?

As a framework designed to help all parties agree on the best possible solution to disputes without recourse to the courts, ADR has clear and tangible benefits. These include the fact that it can usually resolve issues more quickly, cheaply and in a less combative manner than is the case with conventional legal methods such as court cases.

The key benefits of ADR are that it can:

• save time
• save money
• avoid the necessity for a court case
• encourage better customer relationships
• cause less reputational damage
• provide more room for flexibility of outcome

In some cases the parties to the dispute decide the outcome themselves rather than having it imposed on them – this can be extremely valuable in creating and maintaining good will between traders and their customers. As well as being a means of finding a fair resolution, this can also be a way of minimising reputational damage and encouraging repeat custom.

What Dispute Mechanisms Are There?

There are several ADR mechanisms that businesses and consumers can access. The most common methods are mediation, in which an independent third party helps the disputing parties come to a mutually acceptable outcome;

Conciliation, in which the parties use a conciliator who meets with them both separately and together, in an attempt to resolve their differences; and

Arbitration, in which the outcome is decided upon by a third party. Parties agreeing to arbitration usually agree to the decision being binding and therefore enforceable through the courts.

What Do Trade Associations Offer?

Many trade associations offer their own ADR schemes, and willingness to take part in ADR is often a membership requirement of such bodies. For example, the Association of British Travel Agents (ABTA), the Financial Ombudsman Service (FOS) and the Civil Aviation Authority (CAA) all have their own ADR schemes.

But even for businesses that are not part of a trade association, ADR can often be an avenue well worth exploring. And consumers are generally encouraged to try ADR even in cases where the trader's use of such mechanisms is voluntary.

ADR providers are approved by Competent Authorities – bodies that monitor the compliance of ADR schemes to ensure they comply with the relevant regulations. This ensures that any result gained from ADR is administered competently and fairly.

In the UK these are:

• Financial Conduct Authority
• Legal Services Board
• Civil Aviation Authority
• Gambling Commission
• Gas and Electricity Markets Authority
• Office of Communications
• Lead Enforcement Authority for the purposes of the Estate Agents Act 1979 (1)
• The Chartered Trading Standards Institute (CTSI)

New guidance produced by Business Companion – a free online resource developed by the CTSI with the support of the government – has been created to lay out the key facts around ADR for business, and describes the legal responsibilities of businesses that make use of ADR schemes.

To find out more, and to download in-depth guidance on how ADR can be used to help your business, visit: https://www.businesscompanion.info/focus/adr