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Consumer ombudsmen: better regulation and dispute resolution


This paper argues three main points. Firstly, implementation of the EU Consumer ADR Directive offers the opportunity of significantly improving access to justice. But it also offers Member States wider opportunities to do much more. Secondly, the selection of a particular CDR system can have important economic consequences. An arbitration-based CDR system may be entirely acceptable as dispute resolution, but an ombudsman-based system should add the considerable additional advantages of providing extensive consumer advice and also of significant amounts of regulatory information that can be turned to good use through market scrutiny mechanisms and regulatory enforcement authorities. Thirdly, there is the opportunity to modernise every type of dispute resolution mechanism. The mediation technique has been assimilated into litigation systems, but CDR systems show that adopting new architectures for particular disputes can deliver more effective and efficient dispute resolution. Indeed, it is possible to postulate a vision of a reformed, integrated and holistic EU system for resolution of conflicts.

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  1. For the propositions that most C2B claims involve small sums that consumers do not choose to pursue through small claims, collective redress or the courts generally, see Hodges [4] and Hodges [3, pp. 67–89].

  2. Directive 2013/11/EU on consumer ADR.

  3. Directive 2013/11/EU, art 5.1. The ‘residual’ obligation is to create arrangements under which any C2B claim that is not covered by other existing CDR schemes can be submitted to ADR.

  4. Directive 2013/11/EU, art 13.

  5. German Air Traffic Act (Luftverkehrsgesetz), s. 57 ff.

  6. See Hodges, Benöhr, Creutzfeldt [6].

  7. The author has witnessed this proposition being voiced by businesses in various sectors in different EU states, all of which have in common that they have no first-hand experience of CDR systems.

  8. The author has tested this proposition in discussions with numerous ADR entities and at various conferences across Europe in the past four years, with consistent results. The online complaint handling facility resolver considers that perhaps one percent of claims might be unsubstantiated: interview with James Walker in December 2014.

  9. Consumer research– ADR for the UK aviation sector (2CV, 2014).

  10. The UK Financial Ombudsman Service aims positively to reach out to people who experience problems but may suffer from inertia in bringing claims, as well as to target problem areas. The service aims to provide more than advice—three key words used are help, support and conversation. Presentation by C Wayman at the Fourth Annual Consumer ADR conference, Oxford, 30 October 2014.

  11. UK trade association-sponsored arbitration schemes operated by CEDR in UK consciously avoid giving advice because this may be seen to compromise their independence: statement by G Shim at the Fourth Annual Consumer ADR conference, Oxford, 30 October 2014.

  12. Court judgements are confidential in most former Communist states.

  13. Directive on Consumer ADR, art 17.

  14. See Voet [9]; and Voet [10].

  15. See The cost of redress: the lessons to be learned from the PPI mis-selling scandal (Citizens Advice Bureau, March 2014), available at

  16. See quarterly and annual reports of the FOS at A recent stand-alone report on a systemic issue is Payday lending: Pieces of the Picture. Financial Ombudsman Service insight report (Financial Ombudsman Service, August 2014), which highlighted an increase of 168 % between March 2012 and March 2014 (from 296 complaints to 794) in complaints about payday loans, noted actions already taken by the FCA, and recommended various actions by traders, such as operational matters like preventing damage to credit records, poor customer service and poor administration.

  17. See Hodges [5].

  18. See TR13/7—Payment protection insurance complaints: Report on the fairness of medium-sized firms’ decisions and redress (Financial Conduct Authority, 2013), at

  19. A court may decide particular aspects of personal injury or death cases under the ‘partial dispute’ procedure, introduced in 2010: Act of Partial Dispute Proceedings 2010, inserting arts 1019w–1019cc into the Dutch Code on Civil Procedure. A legislative proposal is also being considered to permit points of law to be leapfrogged to the Supreme Court for authoritative determination, so as to encourage settlements under the Class Action Settlement Act 2005.

  20. Commission Recommendation 98/257/EC on the Principles Applicable to the Bodies Responsible for Out-of-Court Settlement of Consumer Disputes, [1998] OJ L 155/31; Commission Recommendation 2001/310/EC on the Principles for Out-of-Court Bodies involved in the Consensual Resolution of Consumer Disputes, [2001] OJ L 109, 56–61.

  21. Directive 2013/11 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR), arts 6–11 for criteria (expertise, independence, impartiality, transparency, effectiveness, fairness, liberty, and legality) and arts 18–20 for competent authorities.

  22. See Hodges [4].

  23. In two related reports: Public Affairs Standing Committee, More complaints please! Twelfth Report of Session 2013–2014, HC 229, 14 April 2014; Public Affairs Standing Committee, Time for a People’s Ombudsman Service, Fourteenth Report of Session 2013–2014, HC 655, 28 April 2014.

  24. For example, access to the PHSO through Member of Parliament is an antiquated and quite unnecessary barrier. Further, the PHSO only accepts a limited number of issues for investigation, whereas a future system should be built around effective advice and complaint handling functions within all public bodies backed by an open ombudsman function.

  25. This has worked well for over 40 years in New Zealand and Nordic countries, for medical claims in France since 2006, and long been advocated by leading academic lawyers: Atiyah [1]; Cane [2].

  26. In addition, to deal with the PIP breast implant problems, private providers and manufacturers should be encouraged to establish mutual long-stop insurance arrangements for the rare instances where a private provider fails or has insufficient insurance, along the lines of investor protection funds.

  27. The fear of recriminations or liability is a significant impediment to reporting of accidents and near misses within healthcare systems. This leads to failure to capture crucial safety information and prevents the achievement of an open and learning culture. The need for fundamental change in the way we approach this was envisaged by organisations such as National CEPOD some 15 years ago and is now championed by the CMO Prof. Sir Bruce Keogh with his emphasis on Clinical Outcome Audit. This concept has been carried further by Prof. Norman Williams and Sir David Dalton in their 2014 paper on Duty of Candour, as well as the RCS initiative on publication of clinicians’ individual outcomes.

  28. The Compensation Myth (Trades Union Congress, April 2014), available at

  29. Occupational Health Statistics Bulletin, 2003/2004, HSC, 2004.

  30. ABI, quoted in Hazards magazine, May 2005.

  31. Work place Compensation (Greenspan Bergman report for ABI, 2002).

  32. DWP Review of ELCI, First Stage Report.

  33. Tribunals Statistics Quarterly: April to June 2014 (Ministry of Justice, 11th September 2014), at

  34. Steadman [8].

  35. Sir James Munby [7].

  36. Mediation Audit 2014 (Centre for Effective Dispute Resolution (CEDR), 2014).

  37. Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 861/2007 of the European Parliament and the Council of 11 July 2007 establishing a European Small Claims Procedure and Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure, COM (2013) 794 final, 19.11.2013.

  38. Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee of November 19, 2013 on the application of Regulation (EC) No 861/2007 of the European Parliament and of the Council establishing a European Small Claims Procedure, COM(2013) 795, 19.11.2013.


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Correspondence to Christopher J. S. Hodges.

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Research funding is acknowledged from the Swiss Reinsurance Company Limited, the international law firm CMS, and the European Justice Forum. This paper was first presented at the Fourth Annual Consumer ADR Conference in Oxford on 31 October 2014. An updated version will be presented at the ERA conference ADR & ODR in the EU on 5 and 6 March 2015 in Trier.

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Hodges, C.J.S. Consumer ombudsmen: better regulation and dispute resolution. ERA Forum 15, 593–608 (2014).

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