Since taking office last year, the Prime Minister has frequently argued that in a well-functioning market consumer rights are acknowledged and protected. She pledged to make this protection work for “ordinary working families”, and in her recent Florence speech she referred to the importance of “strong consumer rights” in the Brexit negotiations. But what will this look like in practice and how do we deliver on this ambition?
An ombudsman is an important element of the structures that provide consumer protection. We’re there to resolve complaints where something has gone wrong, to investigate when necessary and to ask for redress where appropriate. Ombudsman Services covers complaints about the energy, communications and property sectors. We have a key role to play post-Brexit.
While the approach to redress in many of these sectors originates from and is encouraged by Brussels, the right to independent redress in these regulated sectors, as well as finance, is now enshrined in UK legislation. Providers must engage and decisions are legally binding. It is a well-established part of the consumer and business landscape and is unlikely to be removed when we leave the European Union.
There are, however, other aspects of the redress system that are less certain post-Brexit. As part of the Brexit process much, if not all, of the EU acquis will be reviewed. This gives an opportunity to look again at the redress landscape.
A mechanism will need to be established to resolve cross-border disputes post-Brexit. The development of the Online Dispute Resolution (ODR) system provides certainty for consumers when buying goods and services online from other European countries. As we leave the EU, it is important to understand how consumers can still maintain this confidence.
The EU Directive on Alternative Dispute Resolution (ADR), which came into effect in 2015, requires that where a contract exists for the supply of goods and services providers must signpost consumers to redress. In principle this is a welcome opportunity for both consumers and businesses and covers both domestic and cross-border disputes. However, in the way that it has been implemented in the UK, providers are only required to signpost towards redress. They do not have to actively participate in the process. This causes huge frustration for consumers and undermines trust in the marketplace.
There is also a danger that the ADR Directive could weaken existing mandatory ombudsman provision. Implementation in the UK means that, uniquely in Europe, there can be several competing ADR schemes in a sector. An ombudsman is required to provide more than just dispute resolution; typically an enquiries function for consumers, advice to providers, management information to key stakeholders, a focus not just on individual complaints but on reducing consumer detriment overall. An ombudsman looks not only at the contract, but also at whether the customer has been treated fairly. As the Directive sets minimum ADR requirements, there is a risk that consumer protection and redress will be diminished to that low standard.
In all regulated sectors, we should be aspiring to deliver a single mandatory ombudsman. Where there is no regulation in a sector we need to be imaginative in how we encourage maximum participation in the redress process by both consumers and businesses. The Government’s forthcoming Consumers and Markets Green Paper will be a perfect starting point.
We must also keep up with developments within the EU that have an effect on consumers and markets or risk seeing the British consumer disadvantaged. For example, the recently introduced Clean Energy Package sets out measures on protecting vulnerable consumers and supporting consumers as producers of energy. Similarly, the Digital Single Market will have huge implications for consumers, perhaps most obviously in the area of data roaming. While the UK will be able to take control of these policy areas itself, we do need to think carefully about the consequences of not being part of the dialogue, and the need to be open to learning from and adopting improvements offered within the EU.
Consumer protection is a key component in building confidence and ensuring markets work effectively for consumers. We have industrial strategies and business strategies, but industries and businesses are built on customers. It is time we had an equivalent strategy for consumers.
As industry innovations and consumer expectations continue to evolve, it is important that the UK looks at how we can strengthen protection further. If we simply maintain our current position, we will quickly fall behind globally. As the UK explores future trade relationships with the rest of the world, this is our chance to demonstrate the value of consumer protection and the ombudsman model. The concept of an ombudsman may have ancient Viking roots, but its practice of restorative justice and continuous improvement make it an excellent model for solving disputes, helping build trust and contributing to a well-functioning economy. This is our chance to be a world leader.