The Department for Business, Energy and Industry Strategy ("BEIS") has recently published a research paper which assesses the impact and effectiveness of alternative dispute resolution ("ADR") and the court system in resolving consumer disputes with traders[1]. The study is primarily based on a quantitative survey of consumers and traders that used ADR or the courts to resolve a consumer dispute. There has been a big push in recent years to promote the use of ADR by businesses in resolving disputes which have a fairly low monetary value because ADR is viewed as quicker and cheaper for all concerned.

The Report highlights that there is work to be done to increase consumer and business awareness of the benefits of using ADR. To be effective, ADR must (and be perceived to) afford consumers a fair and transparent process, even if the outcome is not in their favour. For businesses, resolving consumer disputes in a timely and efficient manner allows them to maintain their reputation, highlight current processes that need to be adapted and helps to provide greater clarity to consumers.

This approach to ADR is not just limited to the UK, the EU's Online Dispute Resolution platform is mandatory for all online traders and provides consumers with an easy, low-cost process of settling contractual disputes regarding goods or services supplied. Although there is no obligation for the online trader to engage with a consumer who submits a complaint on that platform, it is an easy and again relatively quick and cost-effective route to settling consumer facing disputes.

The study from BEIS reveals a growing trend; businesses that utilise ADR as a mechanism to resolve disputes generate increased customer focus and in turn this drives customer satisfaction. The study cites examples of business that have altered customer service as a result of dealing with a complaint via ADR. Therefore, businesses that have not already done so should consider incorporating an ADR mechanism into their consumer facing terms and conditions to resolve low value disputes and increase their business efficacy.