Lights,Camera, Action! - Alternative Dispute Resolution -October 2015

The Alternative Dispute Resolution Directive comes into effect, from 9 July 2015, obliging businesses to signpost consumers to a certified ADR Provider and businesses with a voluntary trade body scheme or statutory scheme must amend their terms and conditions in their websites by 1 October 2015.  This will be closely followed by the ODR Regulations with the EU Online Dispute Resolution Platform due to come on stream by January 2016.  The stage is set for changes to the way in which businesses deal with unresolved consumer complaints.  BIS will be issuing guidance on 22 June 2015 regarding this.

It will be interesting to see which businesses are early adopters of the new opportunities to resolve customer complaints and which bury their heads in the sand.  Doing the latter could be a costly option, as there is increasing publicity regarding customer complaints, from the extreme and tragic example of Thomas Cook to the more mundane complaint such as that of Audi or Sky TV which have been in the news recently.  Disputes are often dealt with in the "Court of Public Opinion" and through Trip Advisor, rather than through traditional dispute resolution methods, perhaps because people find these methods more effective in punishing a business for poor service than going through a slow Court process.

The Doors to the High Court

The idea of the ADR Directive is to try to help consumers to resolve their complaints without having to go to Court, which is increasingly expensive and stressful and where cases often settle anyway, at the door of the Court.

In the case of Audi, a complaint hit the headlines when a customer purchased an Audi A3 Cabriolet which was damaged on the forecourt.  The customer complained and was offered a free meal for two.  She took this literally, dining out at a Michelin starred restaurant, L'Atelier de Joel Robuchon in Covent Garden at a cost of ￡714.61.  Audi refused to pay the full cost, but did offer to pay ￡250.  The customer has informed me that she would definitely have used ADR if it had been available. Perhaps after 9 July 2015, such businesses will resolve such complaints through mediation.

An Undamaged Audi

Then there was the sorry tale of Mr Smith and Sky TV.  There have been a few reports recently about problems with cancellation of contracts.  In this case, the customer managed to recover ￡1,500 from Sky TV, who settled his claim for the costs incurred in trying to cancel his contract.  Sky magnanimously acknowledged that:

We got it wrong and didn't resolve things quickly enough.  We are really sorry and have apologised

Again, it will be interesting to see whether such cases, including complaints about retailers, are taken to Court in future, or whether businesses such as this will refer them to their nominated ADR entity, which will need to be included in their terms and conditions and on their websites.  Will we see a change of culture in the UK and a less litigious society evolving?

Mr Durkin and his computer is another example of a consumer complaint gone wrong.  Mr Durkin took a dispute over a ￡1,499 laptop from PC World and his credit rating to the Supreme Court and won, but the process took 17 years and he now faces a bill for ￡300,000.  He won ￡8,000 on appeal, establishing the right for consumers to claim compensation for damage to their credit ratings.

In 2008, Aberdeen Sheriff Court ruled that he was entitled to cancel the credit agreement he had entered into to purchase the computer and awarded him damages of ￡116,000.  In 2010 the ruling was overturned at the Edinburgh Court of Session.  Mr Durkin then took his fight to the Supreme Court  which last year said he had been entitled to rescind the credit agreement.

Mr Durkin has been quoted as saying that:

Instead of a house, I'm basically paying a legal bill. Everyone was wondering whether I got my expenses back - and the answer to that is no. But the lawyers are speaking among themselves to make sure I don't have to pay any more.
'I have written to [HSBC boss] Stuart Gulliver directly, but they just say that the courts have dealt with it.
'I'm facing three more years on the [credit rating] blacklist. Not only have I got the ￡300,000 bill, I still can't buy a family home like the rest of my generation - and that's all I wanted to do in the first place. It's sickening - it's only happened because I refused to pay money I didn't owe.'

Unfortunately, for Mr Durkin, winning the Court case has turned into a pyrrhic victory for him.  Even though he won his case, the costs that he now has to pay mean that his credit rating is once again damaged and he has lost out financially.  

A Retail Court

It is hoped that with the introduction of the ADR Directive and ODR Regulations, disputes like this can be resolved more cost effectively and proportionately in future.

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