UK Drops Client On-line ADR Requirement Because of Brexit

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UK Drops Consumer Online ADR Requirement Due to Brexit

Britain officially left the European Union on January 31, 2020. We are now in a one-year transition phase in which the UK has largely maintained many positions before Brexit. However, after the transition period expires, we expect a number of changes to UK consumer law. This is because much of the existing UK consumer law is derived from EU legislation and case law and the UK government wishes to deviate from some less business-friendly aspects. As a result, less regulation is required.

An important change concerns the current consumer law requirement for alternative dispute resolution ("ADR"). After the end of this year, companies with limited exceptions will no longer have to offer an online ADR option.

Currently, retailers have to offer consumers online ADR in their sales conditions. The idea is that consumers should have the right to submit complaints to an independent body if they are not satisfied with how a retailer handled a consumer complaint about a merchandise or service provided by the retailer. These provisions are contained in Part 4 of the 2015 regulation on alternative dispute resolution for consumer disputes (competent authorities and information). We have found that many companies do not meet the requirement to provide consumers with information about online ADR providers.

The regulations were hardly enforced. It is not surprising. Businesses never understood (or followed) the rules very well. With effect from the end of the transition period (also known as the "day of completion of the intellectual property"), the European Union's 2020 law (withdrawal) and the provisions contained therein remove the core of the obligations from the 2015 ordinances December 2020 no longer offer an online ADR option. There are two very limited exceptions: Under the rules of trade associations, member companies may need to use ADR, and certain specific laws may require the use of ADR, e.g. The Communications Act prescribes certain technical provisions so that consumers can use ADR.

This optimization should be a welcome relief for retailers, which are beginning to falter after the COVID 19 crisis. For example, stores continue to be subject to strict social distancing measures and the distribution chains have been severely disrupted.

Traders should look at other steps towards further deregulation. However, if the UK moves too far from EU rules, its ability to trade freely with the block may be compromised.

Squire Patton Boggs specializes in consumer law advice and has represented a number of clients in this area. For expert advice on these and related topics, please contact partner Carlton Daniel or associate Jack Blakey.