Alternative Dispute Resolution

The Alternative Dispute Resolution Directive (the ADR Directive) 4 is intended to give consumers and traders access to out-of-court schemes that can help settle contractual disputes that arise out of the purchase and sale/supply of goods or services. The Directive applies more broadly than financial services, and requires the UK government to ensure that dispute resolution, provided by a qualifying ADR body, is available for any dispute concerning contractual obligations between a consumer and a business, although the use of ADR is not mandatory for firms under the ADR Directive. EU Member States had until 9 July 2015 to implement the ADR Directive.

Following the FCA’s recent publication which confirmed changes to the Alternative Dispute Resolution (Complaints) rules, it has now issued Policy Statement PS15/19 ‘Improving complaints handling, feedback on CP14/30 and final rules’ which details further future rule changes.

The Policy Statement specifies the following new requirements:

Ø  An extension to the ‘next business day rule’, where firms are permitted to handle complaints less formally, without sending a final response letter, to the close of  three business days after the date of receipt;

Ø  Firms must report all complaints, including those handled by the close of three business days;

Ø  Raising consumer awareness of the ombudsman service, by sending a ‘summary resolution communication’ for complaints handled by the close of the third business day;

Ø  Firms must not charge more than a 'basic rate' for all consumer post-contractual calls and all complaints calls; and

Ø  An extended ‘complaints return’ which requires firms to send FCA data twice a year about the number of complaints they receive.

The majority of these changes do not come into force until 30 June 2016; however the limit on the use of premium rate numbers comes into effect on 26 October 2015.

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