ADR and Ombudsman investigations and failures explained

Problems with ADR approval and oversight

ADR and ombudsman services are supposed to help consumers resolve complaints fairly and independently. However, investigations into ADR approval, oversight and ombudsman regulation have raised serious concerns about standards, transparency and consumer protection.

Update to this story Ombudsman Omnishambles: New report exposes serious failings in ombudsman approval and oversight

Further update Landing in court with Ryanair provides links to more reports, articles in the FT  and Which? regarding the mess.

New privatised system of Alternative Dispute Resolution threatens consumer complaints chaos – but even its own implementation has now been delayed…

The ADR Directive

A new EU-mandated system of private ombudsmen which was due to come into force today, 9 July 2015, will not now be implemented 1 October 2015. Private companies will then be handling consumer complaints in sectors including retail, aviation, furniture and property.

Under the new system companies would be obliged to point customers to private complaints-handling companies but would not be bound by their decisions.

Issues in ADR approval and monitoring

Apart from the delay in implementation, there are many problems with the system as it is proposed.

For example:

• There are two ombudsmen for the retail sector: One run by the company The Retail Ombudsman, the other by Ombudsman Services. There are also three ombudsmen for the property sector. This will lead to considerable confusion for the public. [1]
• There are no criminal records checks for ombudsmen employees or directors: The company calling itself The Retail Ombudsman employs a convicted criminal as its communications director. [2]
• One private company already running another ombudsman service pre-launched an Aviation Ombudsman without obtaining CAA permission. [3]
• The CAA had previously confirmed that it would be winding down its own complaints scheme in favour of a privatised operation from 1 September 2015 (depending on certain conditions). [4]
• There is no “ombudsman of ombudsmen” – The body responsible setting up Alternative Dispute Resolution (ADR) schemes, the Trading Standards Institute (TSI), has no consumer complaints system.
• The chairman of the trade body The Ombudsman Association, Lewis Shand Smith, is also the CEO of one of the ombudsman companies. [5]
• When the law eventually comes into force from 1 October 2015, traders will be obliged to tell consumers where to go for ADR but are not obliged to use ADR services.
• Update 12/10/15 Ombudsman services have set up a Consumer Ombudsman for “everything else” increasing the likelihood of more doubling up.

Supermarket comments on The Retail Ombudsman

Asked about the retail ombudsman via Twitter in May this year, Sainsbury’s social media staff replied candidly.

@ComplainingCow Hi Helen, there is no government sanctioned retail ombudsman, only a commercial organisation calling itself one. John.

— Sainsbury's (@sainsburys) May 15, 2015

Further details of these issues are available on request.

About the authors

Marcus Williamson, Editor of the consumer information website CEOemail.com, says “These new companies are in this for the money and will be charging the companies whose customers are complaining. Those costs will inevitably be passed onto consumers through higher prices of products and services.”

More about CEOemail.com:  http://www.ceoemail.com/ceoemail-faq.php

Helen Dewdney, Consumer Champion and author of the book “How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!”, says:  “This ongoing Ombudsman omnishambles is helping no-one and will only result in confusion for consumers. If an ADR regime is to work well for consumers it needs a single ombudsman per sector, a clear code of practice and independent oversight.”

Radio 4 appearance discussing ombudsmen:

I regularly appear in the media discussing consumer rights, complaints, ADR and ombudsman issues. Further media appearances can be found on the media page.

15 November 2018. Presentation on ADR at the Westminster Business Forum. I outlined all the issues with monitoring and oversight of the sector. It covered the risks for both businesses and consumers if unsuitable providers are allowed to continue. I regularly get asked to speak on consumer rights, complaints, customer service and ADR issues. More information about speaking engagements and events can be found on the speaking page.

Notes

[1] For example: http://www.theretailombudsman.org.uk/ and
http://www.ombudsman-services.org/retail-and-other-sectors.html
[2] http://www.theretailombudsman.org.uk/contact/
Neville Thurlbeck, former News of the World chief reporter, was jailed for 6 months in July 2014 for phone hacking. The Trading Standards Institute has confirmed that criminal record checks are not necessary for ombudsman directors or staff.
[3] Screenshot available on request
[4] https://www.caa.co.uk/application.aspx?catid=14&pagetype=65&appid=7&mode=detail&nid=2446
[5] http://www.ombudsmanassociation.org/association-executive.php