Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc.) (EU Exit) Regulations 2020

Lord Callanan Excerpts

Wednesday 16th September 2020 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc.) (EU Exit) Regulations 2020.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 29 June 2020.

We want a relationship with the EU based on friendly co-operation between sovereign equals and centred on a trading relationship based on free trade agreements like those the EU has concluded with a range of other international partners. We will have a relationship with our European friends inspired by our shared history and values. These regulations form part of the important and necessary programme of work being done to ensure that retained EU legislation continues to work effectively and as intended in the UK immediately after the transition period.

Consumers in the UK enjoy a strong framework of statutory rights which enable them to enter into contracts with traders safe in the knowledge that they are protected by the law. These rights help to maintain a fair balance between consumers and business and, in most cases, help consumers to resolve disputes with traders directly. Where resolution cannot be achieved directly with the business, we know that consumers would prefer to have alternative methods of tackling disputes that do not involve the cost or complexities associated with court action.

Alternative dispute resolution, known as ADR, provides a strong alternative to court action by enabling parties to settle a dispute in a favourable manner with the help of an independent third party. ADR is often quicker and cheaper than legal proceedings and, depending on the type used, can produce binding decisions.

I emphasise that these draft regulations have no impact on our access to, or the quality of, ADR in the UK. They also do not alter wider substantive consumer rights and protections available to UK residents, which also remain unchanged.

The regulations are narrow in scope and primarily concerned with the extension of the time limit for bringing court proceedings. They will amend four pieces of legislation which implement EU ADR directives that will no longer apply to the UK following the end of the transition period. The four pieces of legislation currently provide a short extension to the statutory time limit for bringing court proceedings where a consumer is engaged in non-binding ADR with a trader. These extensions allow the ADR procedure to conclude and provide parties with a conditional eight- week grace period to launch legal proceedings if they are not satisfied with the outcome of the ADR procedure. This ensures that parties do not lose their ability to pursue legal action if the time limit for doing so expires during or just after the completion of the ADR procedure.

It is important to highlight that these extensions to the time limit will continue to apply following the transition period but, as a result of this SI, extensions will apply only where the consumer is resident in the UK and the ADR provider is approved under the UK’s ADR regulation. If both conditions are met, the time limits for initiating legal proceedings when engaged in ADR will continue to be extended for UK-resident consumers, irrespective of whether they are interacting with a trader based in the UK or the EU.

The regulations substantively mirror the changes made by the equality exit regulations, which this House has already approved, to Section 140AA of the Equality Act 2010, which provides for extensions of time limits in the case of claims of discrimination relating to consumer disputes. The instrument before the Committee today is designed to ensure that a consistent approach is taken across the statute book to all rules on extensions of time limits deriving from the ADR directive.

These regulations will have no detrimental impact on the majority of disputes involving UK-resident consumers. They also do not otherwise affect the ability of any consumer, whether living in the UK or the EU, to apply to the UK courts or to use ADR as a means of dispute resolution with a trader. Moreover, transitional provisions have been included to ensure that any extensions that have begun before the regulations come into force continue to apply.

My departmental officials have undertaken the appropriate assessment of the regulations’ impact on businesses and relevant bodies. This showed that any impact is likely to be negligible because these amendments do not bring about a wider policy change or impose any new liabilities or obligations on any relevant business, organisations or persons.

In conclusion, the regulations are a necessary and appropriate use of the powers in the withdrawal Act to ensure that this area of law continues to operate as intended after the transition period. I therefore commend them to the Committee.

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[Lord Callanan (Con)]

I thank all noble Lords for their valuable contributions to this brief debate.

I reiterate that these regulations are extremely limited in their scope, to only the short-term extensions of the time limit for court proceedings for consumer disputes. They do not remove the ability for any consumer, whether resident in the UK or the EU, to use ADR in the UK or to access our courts. Disputes involving consumers resident in the UK should not be affected, and the transitional provisions avoid disruption in any case where consumers have commenced ADR proceedings before the draft regulations came into force.

These amendments are necessary as a result of the ADR directive ceasing to apply in the UK when we leave the EU and to prevent inconsistency in the statute book given the changes already made by the equality exit regulations. If these amendments are not made, EU consumers may continue to benefit from the possibility of an extension which might not be available to UK consumers within the arrangements in place in remaining member states.

The Government remain firmly committed to maintaining the high standards from which UK consumers have benefited for many years, and these regulations do not hinder these in the slightest. I reassure the noble Lord, Lord Kirkhope, that our high standards are not and never have been dependent on EU membership. The UK has often led and in most cases goes well beyond the minimum requirements set out by EU consumer law. We also have many excellent consumer advice organisations that guide consumers in pursuing complaints against traders. All of this suggests that for the majority of consumers the current framework works well.

I can also reassure the noble Lords, Lord Mann and Lord Stevenson, that nothing in these regulations has any effect on existing consumer rights, whether the return of faulty goods or refunds for travel or airline tickets. They are all dealt with under separate legislation. It remains the case that many suppliers have offered vouchers for holidays, flights, et cetera, but it is entirely up to consumers whether they choose to accept them. There are separate regulatory and statutory frameworks governing those rights. I reiterate that none of that is affected by this SI.

This legislation is limited purely to the additional time for consumers seeking redress. It allows for short-term extensions to the time limits for court proceedings where that is necessary to give the parties the opportunity to resolve their differences through non-binding ADR. It enables the existing rights to an extension to work effectively after the end of the transition period. We are proud that Britain’s consumer protection regime is among the most robust in the world; the UK has a strong history of protecting consumers in its own right. UK consumers will of course continue to enjoy excellent rights after transition.

The noble Lord, Lord Kirkhope, raised the important question of how the Government will guarantee that consumers will be protected when buying from EU-based traders post implementation period. This point was also made by the noble Lord, Lord Stevenson, with his reference to “the big A”. The noble Lord raised the important point of how consumers will obtain redress in the UK courts from traders based in the EU following the transition period.

Consumers resident in the EU will continue to be able to resolve disputes with UK businesses directly, will be able to use ADR as long as the ADR provider is available to them, and will retain access to the UK courts. EU-based companies selling their products or services in UK-regulated markets must comply with all UK regulatory requirements. In the regulated sectors, this would include compliance with sectoral rules and requirements around the offer of ADR or other forms of redress to their customers. In future we want a relationship with the EU based on friendly co-operation between sovereign equals, centred on a trading relationship based on free trade agreements like those the EU has concluded with a range of other international partners.

The noble Lord, Lord Stevenson, asked about the scope of ADR. My department has announced its intention to review various areas of the consumer enforcement landscape. We intend to bring forward a package of reform to make it easier and quicker for consumers to use ADR services. On his question about engagement with the devolved bodies, this is a consumer protection measure and is reserved, except for Northern Ireland. That has driven the focus of our engagement. As I said, we want a relationship with the EU based on friendly co-operation.

The noble Baroness, Lady Bowles, asked about statistics. Over 2.5 million disputes have been resolved through ADR in the past six years. BEIS research found that 80% of consumers who used ADR procedures thought their problem would not have been resolved without it. We consider that a success story. We will always closely examine areas of the dispute resolution landscape which are not working for consumers and lay out our proposals for reform.

The draft regulations we are considering today do not dilute consumer rights and protections by any means, and merely form part of a programme of legislation required to ensure that retained EU law is workable and free of deficiencies after the end of the transition period. With that, I commend these draft regulations to the Committee.

Motion agreed.