MoneyMagpie

Sep 01

Will the new Consumer Ombudsman end up creating an ‘omni-shambles’ for customers?

From next month, UK consumers will be protected by a new bill of rights designed to resolve disputes with retailers and service providers, including the introduction of a dedicated ‘consumer ombudsman’ to handle small claims (anything under £10,000 in value).

It is being hailed by the British Government as “the biggest overhaul of consumer rights in a generation”, but is the new system all it’s cracked up to be?

Under the new procedure, which comes into effect from October 1, independent not-for-profit dispute resolution body the Ombudsman Services will handle consumer complaints in what is being described as the UK’s first residual Alternative Dispute Resolution (ADR) scheme.

If you believe the hype then this will represent a big boost for “punter power”, with a team of consumer ombudsmen offering assistance in dispute resolutions for free, and within a target eight-week period.

Experts, however, fear that the new system – which will focus on retail companies, home maintenance, improvement or installation services, second-hand cars, car repairs and car servicing – is “too good to be true” and could instead result in poorer outcomes for the majority of consumers.

Jo Holland on the consumer ombudsmanJo Holland, CEO of award-winning firm Small Claims Mediation, welcomes the new legislation for helping put ADR on the radar, but thinks that the promise of free dedicated dispute resolution will ultimately fall flat for many.

She said: “The new process is putting ADR on the map for the first time, which is something that mediation companies have long been calling for.

“But other than this, it seems to be biting off far more than it can chew and may cause more harm than good for many consumers.

“What the Ombudsman Services is offering isn’t actually an alternative form of dispute resolution at all but an adjudication service – they weigh up the cases on both sides and make a final decision, which is then binding.

“This is the complete opposite of mediation and could actually cause more issues than it solves for consumers hoping to get the best resolution with a business or service provider.

“The role of the mediator is not to adjudicate but to encourage all parties to calmly consider the dispute, expectations and commercial interests, and weigh up the strengths and weaknesses of both perspectives with a view to facilitating a fair compromise.

“It is a formal and confidential process open to anyone, and if the negotiations are successful then a legally binding settlement  is drawn up and signed by both parties. Should there be a breach of this agreement, as it is legally binding, it can be pursued through the courts if not honoured.

“One of the major strengths of mediation compared to the consumer ombudsman is that all parties keep control and make a balanced decision at the end of the process. This consensual approach is about reaching a fair compromise and about empowering all parties to work together to bring about a resolution each is happy with.

“This resolution isn’t always financial. Often, a simple apology will be enough. What is important is that through mediation both sides have been encouraged to fully consider each side of the dispute and sort it out in a mutually agreeable way.

“Many businesses agree to enter into dispute resolution for this very reason but by acting as an adjudicator, the consumer ombudsman is taking away this sense of control, and with it a very strong bargaining chip for consumers.

“The new process means the final decision will work to one side’s favour, but not both, and there’s no guarantee that it will be the consumer who comes out on top.

“Critically, mediation focusses on interests, wishes and feelings. If you are a bride who has had a cake which was the wrong shade of cream, you have an emotional connection to this dispute and an adjudicated decision will not leave you feeling like you have been heard or that anyone understands what that cake meant to you and the wedding party.”

According to recent research by the Ombudsman Services, there are a staggering two consumer complaints EVERY SECOND in the UK over dodgy goods and poor levels of services, equating to 66 million complaints in 2014.

But this could just be the tip of the iceberg. It is estimated that some 40 million grievances aren’t pursued because consumers are put off by the perceived hassle in getting redress.

The introduction of the consumer ombudsman has been promoted as a means of making the dispute resolution process more user-friendly and reducing the number of disputes that end up in the small claims court.

Under the Civil Procedure Rules, judges generally expect all parties to have explored the use of ADR before commencing court proceedings and the new legislation obliges all businesses to inform consumers about the availability of ADR schemes.

But Jo, who has mediated on over 1,000 cases and outside of the MOJ  is the most experienced small claims mediator in the country, believes the new system will actually have the opposite effect.
Will the new Consumer Ombudsman end up creating an 'omni-shambles' for customers?She said: “The Ombudsman Service lacks that all-important personal touch that goes a long way to bringing a swift and successful outcome.

“Mediators are experts who in strictest confidence will accommodate both sides’ needs and requirements, taking the time to bring all sides on board if there is resistance, patiently explaining how mediation can avoid a costly and drawn-out court case, and the reputational damage that may follow to the supplier.

“I seriously doubt that the Ombudsman Service has the man-power or resources to offer this same level and depth of service, especially as they are doing so at no cost to the public.

“They will find themselves inundated with enquiries and under such pressure it’s likely that if a company isn’t willing to enter into negotiations straight off the bat then the consumer ombudsman will simply tell the consumer that they were unsuccessful and advise them to take their dispute through the courts.

“The courts are already over-burdened as it is and in any case, not many people are comfortable or confident in taking their dispute through the courts, or have the money to do so.

“Mediation can often resolve an issue in a week whereas the courts can take months to reach a decision. The last thing anyone wants is for things to drag out. It’s stressful, expensive and the verdict, when it comes, is totally impersonal and may not be what the consumer expected or hoped for.”

She added: “From the supplier’s side, they may be less willing to enter into dispute resolution if it’s being handled by a consumer ombudsman as they may question their neutrality or feel the lack of control in the process will work against them.

“They can’t be forced to come to the table and rather than view the customer’s complaint in a more sympathetic light as they would through mediation, they will be on the defensive and may opt to battle it out in court, knowing that there’s a good chance it will never get that far.”

Jo points out that even if a business refuses to enter into dispute resolution through the consumer ombudsman, mediation is still available as an option.

There is a small cost, which can be as little as £50 per party depending on the level of the claim and length of negotiations, fees are split equally between all parties to demonstrate the even handedness of the process.

Mediation has a high rate of success  as businesses are reassured by the neutrality and expertise of small claims mediators, as well as their commitment to working to the specific needs of all parties, such as holding meetings out of office hours or fitting things around a person’s medical needs.

Jo and her team are fully certified by the Chartered Trading Standards Institute (CTSI) and in accordance with the new EU ADR Directive 2015, and are able to deal with any type of consumer complaint where the cost of the product or service in question is less than £10,000.

Examples could include the purchase of flawed furnishings and a defective motor to the wrong shade of wedding dress or even disputes over livestock.

Kashif Rashid, a director at Birmingham-based used car dealership Touchwood Motors is a former client of Small Claims Mediation.

He says that the mediation process was “neutral and open” and helped facilitate a swift and fair resolution to a customer’s dispute.

He said: “When you have that third person involved then you can trust that both sides are going to be heard and a neutral outcome reached.

agreement, mediation“It makes people more willing to enter into a dispute resolution and it’s easy to come to a fair agreement rather than have to take it to the final point, which is the small claims court.

“This saved time, expense and provided the leeway to come to a sensible agreement that both parties are happy with.”

Helen Pettit, Head of Standards and Practice at the Federation of Master Builders (FMB), says the body’s 8,000 members all have access to Small Claims Mediation’s services if they need assistance with a customer dispute.

“Mediation is quick, low cost and a simple method to try and resolve a complaint with a client,” said Helen.

“What I especially like is the friendly approach. Mediators at Small Claims Mediation don’t hand you the law book and speak in legal jargon that you can’t understand. They talk to the man on the street.”

Sean Hooker, Head of Redress & Ombudsman Office with the Property Redress Scheme also comes out in favour of mediation rather than adjudication for the best results.

He said: “In my experience most complaints revolve around the parties needing to be listened to. Once they overcome this hurdle the barriers tend to breakdown.

“Ultimately a customer’s confidence in a market is reinforced where the parties reach conciliation rather than an imposed resolution or, as it too often happens in the ombudsman world. It comes down to whether an amount of compensation is awarded or not!

“This leads to a bitter taste in the mouth of one side or the other and is not conducive to a healthy ongoing relationship.

“Mediation is not the easy option, it is tough but highly effective and leads to stronger and more permanent settlements for both parties and often the restoration of their business together.”

Simon Ayers, Chief Executive of TrustMark – a quality mark scheme for trade associations, local government trading standards teams and independent scheme operators within the repair, maintenance and improvement sectors – has utilised Small Claims Mediation for many years.

He highlights the valuable role of mediation in reducing the number of disputes that would otherwise go to court.

He said: “Adjudication is the ultimate sanction and 80 per cent of challenges can normally be taken out through mediation, so it is of immense value and is an approach that needs to be used more widely.

“Mediation brings normality and reality into a dispute, and a human touch that brings people together to make an informed decision on how to proceed.

“The mediator is solution orientated and asks the right sort of questions about how the parties have interacted, acted and presented themselves.

“It’s about teasing out those important aspects and looking where possible to ensure a positive outcome for both parties and to engage with them to reach that agreement.”

BENEFITS OF MEDIATION

  • Mediators are highly-trained, experienced and neutral third parties who can offer a personal touch to negotiations
  • Completely confidential process
  • Focus on interests, wishes, feelings not just evidence
  • Imaginative solutions can be found which may not always be financial
  • Mediation can bring about rapid and mutually satisfactory settlements as all parties retain full control and a decision is not imposed
  • Fees are split equally between all parties. The costs vary but start from just over £50
  • Appointments arranged at a time to suit parties needs

For more information visit www.small-claims-mediation.co.uk

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