Consumer Rights Act 2015 and Consumer Ombudsman Scheme

Yvonne Fovargue Excerpts

Tuesday 11th February 2020 Westminster Hall

[Martyn Day]

I agree with the course of action suggested by my hon. Friend. It would benefit consumers and traders.

As I have pointed out, membership of an ombudsman scheme is voluntary, and a company can refuse to participate in an alternative dispute resolution process. Even though it may be in the best interest of consumers and companies to deal with problems quickly, effectively and amicably, I am sure no one will be surprised that unco-operative companies prefer to be obstructive, to prevent a quick, effective and amicable resolution. That was the experience of a constituent of mine with one such company, which I will come to shortly.

The Government response conceded that

“there is no mandatory requirement to use ADR although it is available for any dispute should the business decide they want to use it.”

This debate and my prior petition are about the Consumer Rights Act 2015, so it does not compute that businesses can decide whether they want to use an alternative dispute resolution while customers’ wishes are overlooked. It would be helpful if the Minister could explain how that relates to consumer rights. The production of the consumer Green Paper—a positive outcome of my petition—was meant to

“closely examine markets especially those which are not working fairly for consumers.”—[Official Report, 4 December 2017; Vol. 632, c. 6P.]

The example I will give is a good case of that. As my constituent’s experience will show, there are markets that are not working fairly for consumers. Despite the Green Paper, no amendments have been made to the 2015 Act to address the situation.

Among other things, the Green Paper consulted on two matters directly related to my constituent’s case: how to improve the system of alternative dispute resolution, and how to support local and national enforcers to work together to protects consumers. I draw Members’ attention to “Creating a successful enforcement system for UK consumers”, a policy report published a year ago by Which? Among other things, it directly addresses those two relevant matters. It proposes seven changes to create a regime that will protect consumers effectively, because the current system is, unfortunately, too weak.

The report proposes:

“A robust and accessible ADR system is vital for people who have been unable to resolve their complaint directly with the business concerned.”

It further states:

“Key to a successful system is… fair and enforceable decisions by ADR bodies”.

I fully endorse and agree with those points. The report goes on to address the proposed obligation for an ombudsman scheme to be compulsory, stating that

“an obligation on sectors (particularly where significant or essential purchases are involved)”

should be “part of a scheme”.

[Yvonne Fovargue (Makerfield) (Lab)]

Does the hon. Gentleman agree that the landscape of ombudsman schemes is very confusing, and that a single access portal would help the consumer?

--- Later in debate ---

[Kelly Tolhurst]

I am happy to meet the hon. Lady. Without knowing the specifics or the details, it is difficult to comment, but she mentioned contracts.

If parties cannot reach an agreement, alternative dispute resolution can also involve a final arbitration of the case that the business accepts as binding. Alternative dispute resolution has benefits for both parties, but I am concerned that tens of thousands of consumers still go to court to resolve disputes with business. I am also unhappy that many do so because the business refuses to participate in a cheaper, quicker and less adversarial alternative dispute resolution process. I want to make it easier and quicker for consumers to obtain redress across all sectors of the economy when things go wrong.

The Government consulted on the issue in the Green Paper “Modernising consumer markets” and launched a review of the consumer redress system. The review addresses in particular how Government can improve business take-up of the alternative dispute resolution, increase consumer awareness and raise quality standards. Consumers have a right to take a dispute to ADR in the finance, energy, telecoms, estate agent and legal services sectors. In other sectors, there is no mandatory requirement to use ADR, although it is available for any dispute should the business decide it wants to use it.

[Yvonne Fovargue]

The Minister has mentioned a number of areas where there are ombudsmen, but the system is extremely confusing. Is it not time that the Minister committed to a complete overhaul of the ombudsman system to bring them all into line, to give them proper teeth and to make them mandatory, so that they can enforce their judgments?

[Kelly Tolhurst]

I thank the hon. Lady for her intervention and note her particular interest in the area as chair of the all-party parliamentary group. As I will come on to say, we are committed to making the process easier for consumers to get redress. I hope that the response to the Green Paper, and the Command Paper that we expect to publish later in the spring, will give her some confidence in that area.

ADR is not mandatory for the furniture and home furnishings sector, where the furniture ombudsman provides dispute resolution services. The furniture ombudsman is a highly regarded service, but it can only offer its services when businesses join the scheme. I understand that in the case highlighted by the hon. Member for Linlithgow and East Falkirk, the furniture retailer in question had not joined the furniture ombudsman. That is why it was unable to help his constituent, Ms Johnston, leaving the courts as her only route to redress at the cost of much distress to her.