Now that we have made our introductions, we can move onto technical news. In this blog, we consider the new consumer protection regulations from an IP’s perspective.
Before I start I should mention that, if you want to hear something more core to insolvency, you may like to sign up to Jo Harris’ webinar on the Small Business, Enterprise and Employment Act and the Deregulation Act (£25+VAT per person), which is scheduled for 28 July. Please email us on firstname.lastname@example.org for more details.
Alternative Dispute Resolution Regulations 2015
What and when?
There are two statutory instruments:
- The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (“ADR Regs”) (accessible at http://goo.gl/jKmiuV) and
- The Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 (“Amendment Regs”) (accessible at http://goo.gl/6VyV0p).
The Regulations have a range of effective dates: some parts came into effect in April 2015 (but these did not impact IPs), some on 1 October 2015 (amended from 9 July 2015 by the Amendment Regs), and the remainder on 9 January 2016.
DBIS has produced a useful guidance note on the Regulations – scroll down to the pdf towards the bottom of https://goo.gl/EfzYCH. The Law Society has also summarised the position for solicitors subject to the Legal Ombudsman (http://goo.gl/ueQaOp).
The Regulations affect all businesses in the UK that sell goods or services to “consumers”. A “consumer” is defined as “an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession” (Regulation 3 of the ADR Regs). Thus, this brings them into the scope of IPs engaging with individuals in relation to their personal finances.
Will it affect IPs who are not FCA-authorised?
IPs working in FCA-regulated businesses will already be familiar with their requirements to inform consumers at an appropriate stage in the complaints process of their right to refer their complaint to the Financial Ombudsman Service (“FOS”).
However, although IPs may deal with consumers on the basis that they are “acting in reasonable contemplation” of an insolvency appointment and therefore do not require FCA authorisation, this does not appear to exempt them from the requirements under the ADR Regs. For non-FCA-authorised IPs, these Regulations do not require you to use Alternative Dispute Resolution (“ADR”), but they do introduce some new requirements when corresponding with complainants.
How will it affect IPs?
With effect from 9 July 2015, FCA-regulated IPs must provide to consumers – via their websites and in terms and conditions – FOS’ name and web address. Changes have been made to the DISP section of the FCA handbook to implement these changes.
In addition, with effect from 1 October 2015, if a dispute with a consumer cannot be resolved, all IPs must provide the following to the consumer in a letter or other durable medium (e.g. email), i.e. in their final response communication:
- the name and web address of a certified ADR provider (FOS, if the IP is FCA-authorised); and
- state whether they intend to use that provider.
These requirements apply whether or not the (non-FCA regulated) IP intends to use ADR.
DBIS refers businesses to the Chartered Trading Standards Institute for a list of approved ADR providers (see http://goo.gl/1fXl2x). I am also making enquiries to see whether, notwithstanding that an IP might not be FCA-regulated, they may still refer complainants to FOS (as the RPBs do not appear to have the structures in place to meet the ADR requirements).
Finally, with effect from 9 January 2016, anyone entering into contracts with consumers online also must include in their website a link to the Online Dispute Resolution (“ODR”) platform. This will be set up by the European Commission to enable consumers to submit the complaint via an online complaint form to a trader based in another country. However, businesses do not need to be trading with consumers in other countries to be required to provide the link to the ODR platform.
When engaging with individuals as clients in relation to their personal affairs…
With effect from 9 July 2015, FCA-regulated IPs:
- refer to FOS’ website on your website and in your terms and conditions with consumers.
With effect from 1 October 2015, all IPs:
- in your final written communication with a complainant where the complaint is left unresolved, provide:
- the name and web address of a certified ADR provider (FOS, where your work is FCA-regulated); and
- state whether you intend to use that ADR provider.
With effect from 9 January 2016, if you engage with any consumers online:
- include on your website a link to the (yet-to-be-launched) Online Dispute Resolution platform.