The Law Society has changed its advice for firms on compliance with UK regulations which transpose the EU Directive on consumer alternative dispute resolution (ADR Directive).
This is in response to the unexpected withdrawal of the Legal Ombudsman's (LeO) application to the Legal Services Board (LSB) to become certified as an ADR approved body for the purposes of the ADR Directive. Although the Legal Ombudsman has withdrawn its application, solicitors must still comply with the government regulations. New requirements will apply from 1 October 2015 in relation to the information solicitors are required to provide to clients at the end of a solicitor's internal complaints process.
In order to be as comprehensive as possible, this advice provides:
1. a description of the requirements
2. suggested text to be included in letters at the end of first-tier complaints, from 1 October 2015
3. information on further changes that are likely to be made
4. web links to further information
5. frequently asked questions (FAQs)
For further detail on why advice has changed, see FAQ A, below.
1. The requirements
On 28 August 2015, the Legal Ombudsman withdrew its application to the LSB to be certified as an ADR approved body. Before this, it was expected that the appropriate body for solicitors would be the Legal Ombudsman and therefore solicitors would not need to seek another ADR entity to signpost to.
This does not remove the requirement for solicitors to comply with the regulations. In short, from 1 October 2015, solicitors must, at the end of the first-tier complaints process:
- Provide information on the Legal Ombudsman as the statutory complaints scheme for solicitors, and
- Inform the client, on a durable medium:
1. that they cannot settle the complaint with the client
2. of the name and web address of an ADR approved body which would be competent to deal with the complaint, should both parties wish to use the scheme
3. whether they intend to use that ADR approved body
The Chartered Trading Standards Institute (CTSI) have approved a number of ADR entities who will be able to provide ADR services. Traders should check the list of approved providers on their website to identify the most appropriate provider for them.
Solicitors should note that, although they are required to provide information about an ADR approved body, they are not required to submit complaints to the body. The obligation in the ADR Directive and government regulations is to give information (only) and not to agree to the use of the approved ADR. If a solicitor does choose to have complaints submitted to an ADR approved body, it should have regard to the Solicitors Regulation Authority (SRA) code of conduct.
The requirements in relation to the Legal Ombudsman remain unchanged. Under the SRA code of conduct, solicitors are obliged not only to give information but to actively cooperate with the Legal Ombudsman.
Solicitors should be aware that the time limit for clients to get in touch with an ADR approved body will be different to the time limit for contacting the Legal Ombudsman which is currently six months.
2. Suggested text
The Law Society has composed the following text which solicitors may wish to use in their correspondence to clients, once the first-tier complaints process has been concluded:
We have been unable to settle your complaint using our internal complaints process. You have a right to complain to the Legal Ombudsman, an independent complaints body, established under the Legal Services Act 2007, that deals with legal services complaints.
You have six months from the date of this (our final) letter in which to complain to the Legal Ombudsman.
PO Box 6806
Telephone: 0300 555 0333
Email address: firstname.lastname@example.org
Alternative complaints bodies (such as [include one of the following: Ombudsman Services, ProMediate and Small Claims Mediation and the website]) exist which are competent to deal with complaints about legal services should both you and our firm wish to use such a scheme.
We [state whether you do or do not] agree to use [include name of scheme].
3. Further changes
Changes relating to the Legal Ombudsman
Solicitors should be aware that, if the Legal Ombudsman resubmits its application to the LSB and is successful, solicitors will be required to amend the information that they provide to clients in client care letters, general terms and conditions and on the relevant website for that organisation.1 In order to comply with the regulations, the Legal Ombudsman would need to amend its Scheme Rules; this would include changes to the Legal Ombudsman's time limits. Client information would need to reflect this.
Changes relating to 'online traders'
From January 2016, additional requirements apply to online traders and online market places. More information on this is provided in FAQ C, below.
4. Further information
For more information on the EU Consumer ADR Directive and requirements for firms, visit the Trading Standards website.
For more information on LeO's application withdrawal, see guidance provided by LeO. Note: this guidance does not mention the requirement for solicitors to include information on an alternative ADR provider from 1 October.
5. Frequently asked questions
A. I have seen a lot of conflicting advice on the implementation of the ADR Directive. Why is this?
The implementation of the EU ADR Directive, particularly in relation to legal services, has changed over the last six months and because of this, guidance for firms has changed.
In March 2015, government regulations were published which included requirements for traders to provide certain information to consumers regarding ADR by 9 July 2015. The Law Society and the Legal Ombudsman published information advising firms of this.
In June 2015, the government published amendments to the March regulations which delayed the coming into force of the consumer information requirement until 1 October 2015.
It was previously envisaged that the Legal Ombudsman would be certified as an ADR approved body under the regulations for regulated legal services providers. On 28 August 2015, the Legal Ombudsman withdrew its application to be certified as an ADR entity. This has meant that the guidance has had to be changed once again.
As mentioned above, under the 'further changes' section, solicitors will be required to change the information that they provide to clients again if LeO resubmits and is granted certification as an ADR approved body.
B. Previous advice said that I needed to change information in terms and conditions and on my website, do I still need to do this?
No, not at the moment but you may be required to if the Legal Ombudsman resubmits its application and is successful.
This is because the government's regulations2 require that where the ADR approved body is a scheme that the 'trader' is obliged to use (such as the Legal Ombudsman), the trader must provide the name and website address of the ADR entity:
a. on the trader's website, if the trader has a website, and
b. in the general terms and conditions of services contracts, where such terms and conditions exist.
This information must be provided in addition to information provided at the end of the complaints process.
C. Previous advice said that I need to include information on the European Commission's online dispute resolution platform from January 2016, do I still need to do this? (updated January 2016)
If you are an online trader, you must provide additional information to clients from 15 February 2016.
The requirements stem from the EU Regulation on Consumer Online Dispute Resolution (ODR). The European Commission will establish an ODR platform that will allow consumers who have a complaint about a product or service bought online to submit the complaint via an online complaint form to a trader based in another EU member state.
An online trader is defined as, 'a trader who intends to enter into online sales contracts or online service contracts with consumers'. This definition is likely to capture many solicitors who would not ordinarily consider themselves to be online traders. The Department for Business, Innovation and Skills (BIS) has confirmed that this is likely to include solicitors who send and receive contracts, customer-care information, etc to clients via email.
Solicitors who are 'online traders' will be required to provide the following on their websites:
i. a link to the ODR platform (http://ec.europa.eu/odr), and
ii. the email address of the online trader
Additional requirements exist for online marketplaces.
BIS has confirmed that you are not required to provide this information if you fit the definition of an online trader but do not have a website.
If at a future date LeO submits an application and becomes an approved ADR provider, 'online traders', will be required to:
a. provide a link to the ODR platform in any offer made to a client by email, and
b. inform clients of:
- the existence of the ODR platform; and
- the possibility of using the ODR platform for resolving complaints
The information in b. must also be included in the general terms and conditions of online-sales contracts and online-service contracts, where such general terms and conditions exist.
Online traders will be required to provide this information even if they do not market goods or services in other EU member states.
These requirements will apply in addition to any information requirements already applicable to solicitors regarding redress. For example, the requirements set out by the SRA Code of Conduct.
BIS has produced more detailed guidance for business on these changes. For further information on the changes relating to the ODR portal, scroll down to the FAQs at the bottom of the BIS document.
D. Do I still need to provide information about the Legal Ombudsman?
Yes. Clients have a right to complain to the Legal Ombudsman if you are unable to resolve a complaint through your first-tier complaints process. This right and your obligation to properly signpost clients to the Legal Ombudsman are unchanged.
E. When will we find out if the Legal Ombudsman is going to become certified as an approved ADR entity under the ADR regulations?
The Legal Ombudsman has decided to withdraw its application and it is expected to resubmit an application after it has consulted on changes that it will need to make to its Scheme Rules.
This consultation was launched on 7 September 2015 and will run for eight weeks. The Legal Ombudsman's Board, the Office for Legal Complaints, is expected to announce its plans following its Board meeting in December 2015.
F. What should I do if I have already changed my client care information?
The Legal Ombudsman has advised that:
'If you have already changed your client care information based on our earlier guidance please revert back to the existing time limit of six months (from the date of final complaint response letter). We are sorry if this has inconvenienced you, and we will let you know in good time when the next changes are due to be implemented.
'This will not affect our case fee decisions.'5
1 Regulation 19 of the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015
2 Regulation 19 (1) of the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015
4 Regulation 19A (7) of the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015