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The New Regulatory Framework for Consumer Dispute Resolution$

Pablo Cortés

Print publication date: 2016

Print ISBN-13: 9780198766353

Published to Oxford Scholarship Online: January 2017

DOI: 10.1093/acprof:oso/9780198766353.001.0001

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A Dispute System Design Perspective on the Future Development of Consumer Dispute Resolution

A Dispute System Design Perspective on the Future Development of Consumer Dispute Resolution

Chapter:
(p.371) 17 A Dispute System Design Perspective on the Future Development of Consumer Dispute Resolution
Source:
The New Regulatory Framework for Consumer Dispute Resolution
Author(s):

Jane Williams

Chris Gill

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198766353.003.0018

Abstract and Keywords

This chapter explores the concept of dispute system design in the context of consumer dispute resolution (CDR). While there is a growing literature on dispute system design (DSD) in North America, practitioners and scholars in the UK and Europe have failed to give significant attention to DSD as a discrete activity. As the role of CDR within civil justice systems across Europe continues to grow, the activity of ‘designing justice’ in this area should increasingly be seen as a matter of constitutional as well as practical significance. A failure to address this issue risks undermining the continued legitimacy of state-sanctioned dispute resolution for consumer-to-business disputes. In this chapter, we present a new dispute design model for CDR mechanisms and, drawing on several case studies, demonstrate how it may be applied in practice.

Keywords:   dispute system design, ADR, ODR, consumer dispute resolution, mediation, consumer redress

A. Introduction

Dispute system design (DSD) is becoming of increasing importance in the field of consumer dispute resolution (CDR).1 High volume, low value disputes between unequal parties characterize the consumer-to-business (C2B) relationship and these are generally ill-suited to court procedures, even within a small claims framework. As a result, in recent years, there has been a significant increase in the volume of cases being dealt with by alternative dispute resolution schemes across the EU and it is expected that this development will be accelerated further by the recent implementation of the European Union’s Directive on Consumer Alternative Dispute Resolution (2013/11/EU) and Regulation on Online Dispute Resolution for Consumer Disputes (EU No 524/2013) (hereinafter referred to as the Directive and the Regulation respectively). Whilst the Directive sets out minimum quality principles for accredited schemes, designers of individual CDR schemes retain a great deal of autonomy over their final form. Indeed, designers have (p.372) discretion with regard to schemes’ governance arrangements, funding structures, and dispute resolution processes, with the result that widely divergent approaches to CDR remain possible even following the Directive and the Regulation’s implementation.

This chapter argues that a principled and systematic approach to DSD will be important for building trust in CDR schemes and addressing concerns relating to the relegation of the courts to a peripheral role in C2B disputes.2 While the Directive and the Regulation represent a first step, therefore, towards more coherent pan-European approaches, this chapter suggests that questions of good design, along with a host of important technical design choices, remain unaddressed by current European legislative developments. While we do not suggest that a fully harmonized European-wide approach is either realistic or necessarily desirable, we suggest that a framework is required within which to discuss variations in practice and to begin to identify the approaches that are available and the contexts in which they may be effective. With this in mind, therefore, and to start exploring how more systematic approaches to DSD might shape the future development of European CDR, this chapter will present a model which aims to assist those involved in designing and accrediting CDR schemes to make good design choices.

The chapter is divided into three parts. Section B summarizes the DSD literature and its application to CDR. Section C describes our five step model, explains why the model is needed, and highlights its key features. Finally, Section D draws on case study research to highlight the diversity of existing practice and the complexity of the design enterprise in order to illustrate some of the issues our model seeks to address.

B. The DSD Literature3

DSD can be defined as the ‘purposeful’ creation of a system for managing and resolving disputes in the expectation that the system will be used more than once.4 US academics and practitioners—Ury, Brett, and Goldberg—are widely credited as the first scholars to recognize the importance of DSD.5 Their work has subsequently been developed by a number of academics, who have until recently tended to be based in the US and Canada. Our review suggests that the literature falls into two broad categories as demonstrated in Table 17.1 below. The first category is predominantly oriented towards the process of DSD itself (how designers should go about the task of design) while the second category largely concerns itself with the substantive principles, features and characteristics of DSD (what the system of dispute resolution should look like in a particular area).6 Some important issues to note arising from the literature (p.373) include: (1) the distinction between process design, which is primarily concerned with the design of a one-off process, and system design, which is more concerned with the institutionalization of dispute design in the expectation that it will be used repeatedly for a wide range of disputes7(2) Bingham’s emphasis on how design has a significant impact on the quality of justice outcomes and the critical role the designer therefore plays in ‘designing justice’8 and (3) the fact that much of the literature has (p.374) (p.375) been developed in the context of organizational conflict and has a strong bias towards recommending interest-based approaches to dispute resolution.

Table 17.1 Summary of key DSD Literature

Author(s)

Area of dispute

Key findings

1. The process of DSD

Lande 20079

All

4 stages: (1) assessing needs (2) planning a system to address those needs (3) providing necessary training and education (4) carrying out an evaluation and modification.

Fader 200810

Courts

7 stages: (1) Self-assessment (2) getting leadership on board (3) designing the system (4) considering training and resources (5) implementing the design (6) evaluating the design (7) diffusing the design.

MacFarlane 201111

All

4 key design steps: (1) problem diagnosis (2) designing outcome objectives and goals (3) consulting stakeholders (4) educating and motivating clients.

Smith and Martinez 201212

All

5 part analytical framework, which draws attention to: (1) goals (2) processes and structure (3) stakeholders (4) resources (5) success and accountability

2. DSD features, principles and characteristics

Ury et al, 198813

All—case study developed from workplace dispute context.

6 key features (1) interest-based process (2) ‘loopbacks’ that encourage disputants to return to negotiation (3) low cost rights and power-based processes as a back-up (4) consulting stakeholders and feeding back after design and implementation (5) beginning with low cost processes, progressing to more complex, higher cost processes (6) motivating users to make procedures work.

Costantino and Merchant 199614

Focus on workplace disputes.

6 principles: (1) developing guidelines on when ADR is appropriate (2) tailoring ADR to the particular problem (3) building-in preventative methods of ADR (4) ensuring disputants have the necessary skills and knowledge to choose ADR (5) ensuring the system is simple to use and easy to access, and focuses on early resolution (6) allowing disputants to have choice over the ADR process and third party.

Shariff 200315

All—developed from an international relations case study.

5 Variables: (1) membership (2) scope of jurisdiction (3) degree of centralization of activity (4) control over decision making and (5) flexibility. 7 design principles: (1) inclusiveness (2) ensuring a broad coverage of issues of interest (3) ensuring broad and deep jurisdiction (4) providing central sources of information and dissemination (5) decentralizing discussion of the issues to facilitate grievances and issues being raised and resolved informally locally (6) vesting control over decisions in those affected most (7) ensuring the system is regularly reviewed.16

Barendrecht 200917

Microjustice.

5 essential tasks which should form the basis of dispute systems: (1) meet (2) talk (3) share (4) decide (5) stabilize.

Bondy and Le Sueur 201218

Administrative justice.

9 Principles for redress design: (1) presumption in favour of an effective pathway and remedies for addressing disputes (2) design should respect constitutional principles (3) there should be public accountability for the dispute system (4) design based on evidence (5) opportunities for grass root innovations (6) ensure value for money and proportionality (7) good fit between grievance and redress mechanism (8) fair and rational criteria and processes to filter inappropriate grievances (9) redress design should lead to wider improvements in public services.

3. Mixed

Blomgren Bingham 200819

All—focus on the workplace

  • Non exhaustive list of 15 structural variables and/or choices relating to DSD identified using principles from the institutional design literature.20

  • Variables and choices relate to the sector (public, private or non profit), type of design,21 jurisdiction, eligibility, timing of intervention, whether voluntary or mandatory, nature of the intervention,22 sequencing of intervention, type of intervention (e.g. whether interest or right based), role and type of third party neutral, costs, nature of due process, structural support for the dispute system, disputant control over the process outcome and DSD.

In the specific field of CDR, while not directly addressing the concept of DSD, a number of authors have made contributions in relation to design issues. Steffek et al., for example, have recently looked at dispute design from the perspective of the State’s role in regulating dispute resolution.23 They have produced regulatory principles relating, inter alia, to choice of procedure, costs, confidentiality, jurisdiction, role of the neutral party, enforceability, and transparency. The issue of CDR in the European Union has also been addressed by Hodges and his colleagues who set out a normative model for a CDR scheme, identifying thirty-one desired characteristics24 and proposing four essential requirements for dispute systems relating to accessibility, the requirements of justice, effectiveness, and accountability.25 There is also a significant body of literature on ODR which has relevance for dispute design. Cortes, for example, recently drew on design literature to argue that ODR designers and policy makers often fail adequately to incentivize the use of CDR mechanisms.26

In summary, both the DSD literature and the literature considering the development of CDR and ODR set out helpful ideas in relation to the process of designing dispute systems and the normative features which such systems ought to have. Unfortunately, these literatures have developed in isolation, with the DSD literature tending to be overly focused on design processes, workplace disputes, and the promotion of interest-based dispute procedures, while the CDR and ODR literature has tended to be overly focused on normative discussions regarding the best ways of resolving consumer disputes. Our model aims to reconcile these approaches by drawing on DSD concepts in the context of CDR and to provide those with the responsibility for ‘designing justice’ with a practical tool for ensuring that a comprehensive set of design variables are considered within the design process.

C. Model Overview

We propose a five-step model for the rational and systematic design of consumer redress mechanisms, as shown in Figure 17.1 below. The rationale for the model is that dispute design is a complex activity requiring a wide range of interrelated decisions to be made and it can, as a result, be difficult to identify where the best place to start is and why. Typical decisions in relation to the design of a CDR mechanism include not just whether it should include conciliation, mediation, or arbitration, but also what are the aims and objectives for the scheme? Who pays? Is the scheme going to be compulsory? Who is entitled to complain? Who is the scheme accountable to? Is it a one or two stage process? Is there a right of appeal? How will technology be used with the scheme and what qualifications and skills should the complaint handlers have? Many (p.376) of the choices the designer faces will impact on each other and the model therefore is intended to (a) facilitate good design choices by providing a structure to DSD decision making by clearly identifying the decisions that need to be made and the broad sequence in which they should be made (b) help designers demonstrate a clear rationale for the final system design adopted and (c) provide a helpful analytical framework for policy makers, scholars, and competent authorities under the ADR Directive, to evaluate dispute systems post-design.

A Dispute System Design Perspective on the Future Development of Consumer Dispute Resolution

Figure 17.1 A dispute system design model for consumer redress

The model shown in Figure 17.1 is divided into two broad areas: pre- and post-design activities on the left hand side (steps 1, 2 and 5) and core design activities on the right (steps 3 and 4). In step 1, we suggest that the process of design should begin with research and analysis, in order to understand the context in which the CDR mechanism is being designed. This should be followed, in step 2, by a goal-setting phase where the various legitimate goals which a CDR mechanism might fulfil are considered and prioritized. Research, analysis and goal-setting lay the ground for the design activities in steps 3 and 4, which form the heart of our model and provide a framework for understanding the key design choices open to designers and for structuring those choices in a logical order. Finally, the model suggests an evaluation stage, where outcomes feed back into the continual re-design of CDR mechanisms. The model is designed such that decisions taken at each of its steps refine, limit, and set the context for decisions taken in subsequent steps: research and analysis sets the parameters for goal setting, goal-setting provides the boundaries within which system design choices are made, and so on.

(p.377) The detailed features of the model are described below.

Step 1: Research and analysis

The first step is to identify exactly what the problems are that the dispute system is being designed to deal with. Key questions to be answered here include: what are the disputes about, how much detriment is at stake, how are disputes currently being dealt with, how many of them are there, what are the current and anticipated problems, and what outcomes are looked for? The research and analysis stage should seek the views of stakeholders and consider other factors which may be of relevance, including contextual and cultural factors. In terms of the Directive’s implementation in the UK, relevant contextual information includes the fact that the use of ADR is not being made compulsory and the existing CDR landscape is very complex, with over seventy schemes of various quality as well as significant gaps in coverage in areas of high consumer detriment, such as home improvements, retail and second hand cars, repairs and servicing.27 More generally, important issues in relation to C2B disputes relate to: the low value of many C2B disputes; inequality of bargaining power; and information asymmetries between consumers and businesses. EU research also suggests that whilst small claims procedures reduce procedural complexity, courts are still not perceived by consumers as being sufficiently user-friendly and that for many consumers the costs, both financial and emotional of taking legal action, even within a small claims procedure, are simply too high.28 Service user expectations in terms of what should happen when raising a complaint should lie at the heart of an effective complaint handling system and the research stage presents an opportunity to ensure that those expectations are identified and addressed within the dispute design. Changing expectations around customer service will have an impact upon the level of service consumers are willing to accept from the ADR body, particularly around perceptions of speed29 and personalization. This will also potentially be driven by an increase in awareness of CDR as a result of the information requirements of the Directive, as well as other changes in consumer complaint behaviour.30

Step 2: Goal-setting

Having clear goals and objectives informs subsequent system design choices and allows competing goals to be ranked and prioritized.31 Typical goals in relation to CDR relate to: improving efficiency in dispute resolution (which includes ensuring that the schemes are self funding), increasing access to justice, improving consumer confidence, ensuring a level playing field for reputable traders, and ensuring appropriate (p.378) procedural and quality safeguards are in place to secure consumer and business trust. The Directive has as its central goal to increase consumer confidence in the internal market,32 but beyond this allows member states to pursue their own goals through the implementation process. In the UK, it appears that the Department for Business, Innovation and Skills’ (BIS’s) goals include improving accessibility and efficiency, in the expectation that the commercial market for CDR will continue to evolve to fill in any gaps in the current ADR landscape.33 In terms of reducing complexity, BIS is seeking to achieve this not by rationalizing the current redress landscape, but by improving signposting via additional funding to the Citizens Advice Service.34 Depending on the sectors in which they operate, different CDR schemes across Europe will be driven by different goals. In some, speed and low-cost will be paramount, in others robust processes that command absolute consumer confidence will be preferred.

Step 3: System design (1st order) choices

Having undertaken the research and analysis stage and set goals, it is then possible to move on to identify the key design choices relating to system design. The design choices presented here in relation to system and process design were developed during case study research undertaken for the Legal Ombudsman in 2014 and the authors are indebted to the original field work on which it was based for developing their thinking.35 The research demonstrated that a range of approaches existed in relation to the design of CDR and that practices and approaches were often context specific, making it difficult to suggest that any individual practice represented best or good practice. The original research report highlighted ten design choices facing designers, each of which existed on a spectrum and offered a range of options. The model was subsequently developed by more clearly identifying the pre- and post- design stages, but also in terms of identifying the choices which relate to the dispute system and those that relate to the dispute processes within a system. System design choices have been called ‘1st order choices’ as the choices here should be made first as they influence, frame, and limit the choices to be made at the next stage. Process design choices have been labelled ‘2nd order’ decisions therefore as they follow on from the system design choices. The model does not dictate what final form the design should take but instead seeks to provide a framework for design choices in order that designers can ensure that a clear rationale exists for all aspects of a scheme’s design.

In terms of system design, the key choices relate to jurisdiction, funding, governance, accessibility, and dispute resolution philosophy. Typical decisions to be made here include what subjects or complaints fall within the scheme, whether the scheme will be paid for from public funds, how the independence of the scheme is ensured, and whether the focus of the scheme will be interest based or rights based, inquisitorial or adversarial? As noted above, it is assumed that as a minimum the designer will ensure that the provisions of the Directive will be met, although this still gives designers considerable discretion over what the final scheme looks like. Table 17.2 below (p.379) therefore sets out five key areas in which system design activity takes place and highlights some of the most important design choices that are required in each area. In this chapter, to allow for a discussion of how the model applies in practice, only a high level overview of the design choices is provided. For a more detailed discussion, please see Gill et al.36 (p.380)

Table 17.2 System choices—1st order decisions

Key design areas

Design choices

Jurisdiction

  • What subjects of complaint are within the scheme’s jurisdiction?

  • What time limits and/or other restrictions limit the complaints considered?

  • Who is entitled to complain?

  • Which businesses are included?

  • Is the scheme’s jurisdiction voluntary or compulsory?

  • Where does the scheme’s jurisdiction begin and that of courts and regulators end?

Funding

  • Will the scheme be paid for from public funds or by industries subject to the scheme?

  • Will the scheme charge case fees, a levy, or both?

  • What level will case fees/levies be set at?

  • Will the scheme’s funding mechanism aim to promote the early resolution of disputes?

  • What mechanisms will be in place to ensure industry funding does not compromise independence?

Governance

  • Will the scheme be a statutory or private organization?

  • Who is the scheme accountable to?

  • What are the public reporting requirements?

  • How is the independence of the scheme ensured?

  • What arrangements are in place for ongoing review?

  • Are the scheme’s decisions to be subject to review or appeal by courts (or other mechanisms)?

Accessibility

  • To what extent will the scheme advertise?

  • What level of support, information and advice will the scheme provide to consumers (especially vulnerable consumers)?

  • To what degree will representation be required?

  • What will the relationship be between the scheme and internal complaints processes?

Dispute resolution philosophy

  • Will the scheme focus on the provision of individual or collective redress, or both?

  • Will the scheme adopt a predominantly interest-based or rights-based approach?

  • Will the scheme adopt an inquisitorial or adversarial approach?

  • How is the relationship between regulation and dispute resolution conceptualised?

  • To what extent will the scheme engage in standard-raising work?

  • To what extent will the scheme provide for choice in the processes and outcomes of dispute resolution?

Table 17.3 Summary of process design choices (2nd order choices)

Key design areas

Design choices

Process options

  • Will the scheme use negotiation, conciliation, mediation, arbitration, adjudication?

  • Will the approach be evaluative, adjudicative, or facilitative?

  • Are there advantages to using an ombuds scheme?

Process architecture

  • Will it use a single process or multiple processes?

  • If multiple processes, who will choose which process is used?

  • Where multiple processes are used, how many steps will be included?

  • To what extent will the scheme seek to use resolution-focused and filtering models?

Technology architecture

  • Will the scheme be technology-based or technology-assisted?

  • Where technology is a feature, does it replicate existing modes of dispute resolution?

  • How can technology be used to assist information advice and resolution?

Powers and scope

  • What powers of investigation will the scheme have?

  • What will be the status of decisions?

  • What remedies can be imposed?

  • What norms will the scheme use, legal or extra-legal?

  • What powers of sanction are there?

  • What powers does the scheme have for collective redress?

  • What is the relationship of the scheme to regulators in relation to compliance?

Decision-maker attributes

  • What skills/expertise will be required of decision-makers?

  • Will the scheme use a single decision-maker or a panel?

  • What qualifications will staff be expected to have or obtain?

  • How transparent will the qualifications of the scheme’s staff be?

  • What arrangements will be in place where conflicts of interest arise?

Step 4: Process design (2nd order) choices

Once the first order choices are made, decisions can be made regarding the processes that the scheme should use. Table 17.3 sets out five key process design choices for designers relating to process type, process architecture, the use of technology, the scheme’s powers, and scope and decision-maker attributes. Typical decisions to be made here include whether to use predominantly evaluative, adjudicative, or facilitative processes, whether to use a single or multiple stage process, the extent to which technology and ODR can be used to support complaint handling, and choices relating to the qualification and skills the complaint handler should have. Some of the key choices to be made in relation to process design are shown in Table 17.3.

Step 5: Evaluation

The final step in the model recognizes the importance of ongoing evaluation and review in ensuring that the system remains fit-for-purpose. Important issues relating to evaluation include whether the dispute system design has done what it said it was going to do (based on the goals established at step 2 above) and what changes might be required in response to new challenges and developments. Additional questions relate to: who is carrying out the review; with what is the system being compared (for (p.381) example is it being compared to the courts or other ADR mechanisms); and, what criterion is being used for the evaluation? MacFarlane highlights the importance of going beyond the label attached to a form of dispute resolution to evaluate the actual practice of dispute resolution.37 This recommendation resonates with recent research in the UK and Ireland, which highlighted how some of the common terms used by ombuds schemes meant different things in different schemes and conversely how different terms could be used to describe similar processes.38 Whilst there is some protection for the term ‘ombudsman’ in the UK, it is used by a number of very different schemes, possibly leading to consumer confusion.39

Important methodological choices also relate to the extent to which quantitative or qualitative data is used in the evaluation process.40 Several reports in recent years have highlighted the difficulty in obtaining and comparing data more generally across different CDR schemes within the UK.41 The Directive’s transparency, approval, and monitoring requirements are likely to be helpful here both in terms of requiring certain information to be made publicly available by all schemes but also by placing a monitoring requirement on competent authorities to review the performance of approved ADR bodies.42 A particularly tricky issue is how to assess the ‘quality’ of the CDR outcomes. Whilst the Directive’s information requirements relate primarily to quantitative data, the CDR scheme must, as part of its biennial report to the competent body, include a self-assessment of the effectiveness of their ADR procedures and of possible ways of improving its performance.43 The degree of scrutiny this provision (p.382) will require is left to the individual discretion of the competent authority concerned and it is not clear from the Directive what action could be taken in relation to these reports and what powers the competent authority may have to investigate this.44 The existence of multiple competent authorities in the UK and across the EU may mean there is potential for considerable variation in the approach taken to this.45 Kirkham for example has questioned whether the competent bodies are ‘sufficiently well-equipped to provide the consumer with the confidence that the integrity of the sector is robust enough to secure an equality of arms in the resolution of disputes’.46 It is suggested therefore that schemes’ self-evaluations should go beyond the Directive’s minimal requirements in order to ensure their designs continue to be fit for purpose.

D. Lessons from the Case Studies

So far this chapter has set out the key features of our DSD model. It now turns to discuss some of the key design issues that arose from the case study research in order to highlight the diversity of existing practice and the complexity of the design enterprise. The discussion is cross referenced to the model described in Part C in order to demonstrate how the diversity and complexity of current design practice are matters that our model seeks to address. The research involved fieldwork in the summer of 2014 with ten organizations: four in the UK, two in New Zealand, and one each in Australia, Canada, Ireland, and the USA. It aimed to identify a range of dispute resolution practices in order to identify some of the key design choices that ADR providers have to address. It mostly considered CDR schemes, but also considered other forms of dispute resolution operating in other sectors. Overall, the case studies demonstrated the wide range of approaches that could be taken in terms of dispute resolution and how context specific many of those were. Dispute system designers need to consider a wide range of variables and the case studies helped demonstrate some of the intended and unintended consequences of those design choices. The discussion below focuses on five of those schemes, namely: The Irish Financial Services Ombudsman Bureau, the UK’s Furniture Ombudsman, the Small Claims Mediation Service in England and Wales (a court annexed telephone mediation schemes), the Australian Financial Ombudsman Service and PhonepayPlus (a regulator that handles complaints about premium rate and phone paid services in the UK).

(p.383) The Irish Financial Services Ombudsman Bureau (FSOB) is a statutory body with a compulsory jurisdiction over complaints about financial services providers in Ireland. In 2014, they dealt with 4,477 complaints.47 In terms of jurisdiction, the first system design choice our model suggests should be addressed, decisions of the FSOB are binding on both parties whilst also giving both sides a right of appeal to the Irish High Court. In an ombudsman context this approach is relatively unusual as decisions usually bind the business only and give limited rights of appeal to the court. The FSOB have found that, compared to other schemes, they have a relatively high number of appeals to the court. At the time of the research, they were facing around forty ongoing High Court appeals and two cases in the Supreme Court—20 per cent of its budget being devoted to legal costs.48 In order to withstand judicial scrutiny, therefore, in relation to matters of procedural fairness, the FSOB has adopted a dispute resolution philosophy (the final 1st order decision in our model) and processes (2nd order choices in our model) that are more akin to those of a court. Its 2012 Annual Report described its scheme as possessing ‘a level of legal formality unique in the international ombudsman community’.49

Unlike many other ombudsman schemes, nearly all cases are dealt with by way of formal adjudication and there is no attempt to conciliate or negotiate an agreed resolution other than a very small number of cases where mediation may be used. Parties are usually legally represented and the process was described as being highly adversarial. Mediation is not used regularly (around fifteen cases per year) but it was viewed by the organization as a useful process for high value or particularly complex cases which could benefit from more facilitative techniques.50 In contrast to schemes which have been trialling the use of mediation via ODR techniques or via the telephone, mediation was conducted in person at the FSOB’s office in Dublin by one of three staff who has received formal mediation training. The interviewees noted that it was usually the service provider who was unwilling to agree to mediation, preferring an adjudicated settlement. Despite this, they envisaged that that there was potential to increase its use of mediation to resolve complaints.51

The Furniture Ombudsman (FO) scheme was another good example of a scheme which demonstrated how choices made in relation to jurisdiction (in particular whether a scheme’s membership is compulsory or voluntary) and funding, frame (p.384) choices relating to a scheme’s underlying dispute resolution philosophy (all 1st order choices in our model).52 Whilst all schemes, whether publically or privately funded, face financial pressures, funding is likely to be particularly acute in self-financed schemes where scheme membership is not compulsory. In these schemes, the ability to engage and fund activities associated with widening accessibility, standard raising, or addressing collective issues is likely to be more difficult. The FO in the UK is a small (nine members of staff) voluntary membership scheme which provides a low cost dispute resolution scheme for dealing with consumer complaints about furniture and home improvements. In 2012/2013, it dealt with 1,817 complaints. The organization has had to work hard to demonstrate the benefits of membership to existing and prospective members, which has included ensuring that its fee structure is competitive and represents good value; at the time of the research, the FO had not increased its fees since the early 1990s.

The scheme includes both a conciliation and an adjudication stage. However, cases will only progress to adjudication if a consumer’s case appears reasonably strong and there are conflicts in evidence or important points of contention to be resolved. It is the caseworker, not the parties, who will decide whether adjudication is appropriate and the same caseworker who deals with the case at both stages.53 Despite the need to keep costs low, the FO still sees standard-raising work as an important part of its dispute resolution philosophy (the final 1st order choice in our model). In keeping with its funding model, the scheme’s focus on standard-raising work tends to be on those areas viewed as adding value for its industry members, such as the provision of business advice and low-cost training rather than publishing complaints data or engaging in other work which may be viewed as having more of a consumer focus.54

As well as the extent to which a scheme should engage in standard-raising work, one of the key questions many schemes face in relation to their dispute resolution philosophy is whether to take an interest-based or rights-based approach.55 This is core to the type of ADR mechanism that a scheme wishes to be. Does it wish to foster agreements between parties, repair relationships, and use predominantly facilitative techniques? Or is it more concerned with evaluating the merits of cases and providing objective decisions? In our model, decisions taken regarding this aspect of dispute resolution philosophy directly impact on the 2nd order choices to be made in relation to the processes to be used. (p.385) Most of the literature on DSD advocates an interest-based approach, however, in many C2B disputes there is no need to maintain a long term relationship and, as a result of the significant power imbalances which exist in many C2B disputes, a number of academics have instead argued that a rights-based approach is the most appropriate in the C2B context.56 Our research found that genuinely consensual approaches in CDR were in fact used very little in the case studies we considered and that what a scheme called mediation or conciliation was often much closer to a form of facilitated negotiation followed by an adjudicative process.57 Bondy, Doyle and Hirst’s research in the UK and Ireland reached similar findings in relation to early resolution in ombudsman schemes.58

There were, nonetheless, some examples of more facilitative techniques being used amongst our case studies, sometimes as one of a range of options available to the parties. The Small Claims Mediation Service (SCMS) run by Her Majesty’s Court and Tribunal Service in England and Wales provided a useful example of how mediation can work well in the context of C2B disputes. The service runs a court-annexed telephone mediation service for small claims disputes in England and Wales. Demand for the service outstrips available resources and the scheme reports very high levels of customer satisfaction, with 94.4 per cent of respondents stating that they would use the service again.59 The mediation process here takes place very much in the shadow of the court, which undoubtedly helps to focus minds on resolution. It also ensures that an appropriate rights-based resolution mechanism is available as a last resort if the dispute is not resolved.

Our dispute design model suggests that choices made over dispute resolution philosophy will frame decisions to be made on process options. For example, whether to adopt a facilitative, evaluative, or adjudicative model of dispute resolution will fall within the category of 2nd order choices. Australia’s Financial Ombudsman Service (FOS) is a good example of a scheme which offers a range of techniques to resolve its disputes. It is a voluntary scheme (although all financial services must be members of an approved scheme) which is funded by a combination of a levy on financial service providers and case fees. It has a number of different processes for resolving complaints including a telephone conciliation procedure, a recently implemented fast track procedure, as well as panel decisions.60 Its telephone conciliation conferences demonstrated that conciliation can be rolled out for use in a reasonably high volume context and satisfaction rates with the process appear high.61 After successful piloting, it has also (p.386) introduced a fast-track procedure for single issue, simple, low value banking and finance complaints which moves complaints much more quickly to a decision and uses a truncated version of their existing telephone conciliation service.62 Panel decisions are primarily used for insurance disputes.63 Panels are likely to be more expensive than single decision makers, but they can be particularly helpful in industries which require assurances regarding the perceived fairness, balance, and expertise of the decisions to which they will be subjected as the panel can include both consumer and industry representatives.64 In the case of FOS, panel decisions are popular both with industry and consumer organizations, who see them as a way of ensuring their views are being taken into account, particularly where dealing with contentious industry wide issues.

Where a scheme provides a number of different stages or different processes, as with FOS, a key question will be who controls access to the different processes and to what extent decisions on which processes to use are subject to review. Our model suggests that this decision relates to dispute resolution philosophy. If the parties have a right to decide, this may increase costs, as cases that—objectively—do not merit escalation end up at the formal stages of the process. Interestingly, the Directive sets out a number of grounds on which a scheme can refuse to deal with a complaint, which includes not only the fact that the dispute is in their view ‘frivolous or vexatious’ but also that ‘dealing with such a type of dispute would otherwise seriously impair the effective operation of the ADR entity’.65

Finally, a very different approach to dispute resolution philosophy was illustrated by PhonepayPlus, which is a regulator that also deals with complaints.66 Combining regulation and redress is not a popular model in the UK and research by Gilad has demonstrated that demarcating the relationship between the redress provider and the regulator can be tricky.67 The majority of the complaints PhonepayPlus deal with are relatively low value high volume complaints,68 but they also operate in a market where there is significant potential for fraudulent activity (p.387) and as a result they have substantial enforcement powers, which include the ability to impose penalties up to £250,000.69 The decision to impose sanctions, or to require redress, or both, is taken by a tribunal of three and it is a relatively quick process, with the average amount of time that a case will take from allocation being sixteen weeks.70 PhonepayPlus take a proactive approach to monitoring the market they regulate and work closely with industry to ensure that the latter is able to innovate whilst still maintaining a high level of consumer protection. In recent years, regulators have increasingly been given redress powers—for example Trading Standards Officers were recently given enhanced consumer redress powers under the Consumer Rights Act 2015.71

E. Conclusion—DSD and the Future of CDR

The design of CDR schemes in the past has often been the result of a random mix of accident, imitation, adaptation, instinct, and political compromise. Designing CDR requires two core sets of expertise—one relating to the effective operation of institutions and one relating to the effective operation of dispute resolution processes. This expertise has not been lacking in design activity to date, but it has often been deployed as art rather than science, and in order to tackle particular problems at particular times. This approach has worked well while CDR was a cottage industry, restricted to particular sectors of activity and remaining a somewhat peripheral alternative to the courts. As the field of CDR comes of age, however, a more scientific and systematic approach is required as the role of CDR within the civil justice systems across Europe continues to grow and the and the activity of ‘designing justice’ is increasingly seen as a matter of constitutional as well as practical significance. The model presented in this chapter is offered as a starting point in this respect. As explained earlier, the model has already been through several iterations and undoubtedly has potential for further refinement. The authors hope that, through academic critique and engagement from practitioners, the model can eventually be developed as a practical resource for drawing on DSD concepts in the future design of CDR.

As well as the constitutional significance of design activity, Bondy and Le Sueur have helpfully identified the range of actors involved in redress design in relation to administrative justice and the various levels at which design activity takes place. Adapting those notions to the CDR field, there is potential for the model to be of use to four groups of actors: landscape designers; scheme designers; evaluators; and other stakeholders. Landscape designers are those with the responsibility for shaping the overall system of CDR operating within a country. While our model focusses on the design of individual CDR schemes, rather than the design of the overall system for resolving consumer disputes, there is clearly a strong relationship between these. (p.388) Landscape designers may wish to use the model to help rationalize and standardize some aspects of the CDR landscape, using it as a reference point to help compare and assess existing approaches. Scheme designers are those who are responsible for the design of new schemes (such as new entrants in the CDR market) and those who are re-designing existing schemes.72 Those who are re-designing existing schemes will have a strong basis of experience on which to make their design judgments; at the same time, they are likely to be heavily influenced by path dependencies and existing approaches. For these designers, the model offers a framework for self-reflection and fresh thinking. For those who are new entrants, the model offers a first principles approach to scheme design.

The model may also be of benefit to those who are less involved in design and more in evaluation. Some schemes are already subject to regular independent reviews and may benefit from using the model as a common framework for assessing the quality of existing approaches and practices.73 In addition the creation of competent authorities as a result of the Directive, means that a number of organizations across Europe now have a formal role in assessing the quality of CDR being provided by schemes. Whilst the reporting requirements under the Directive are relatively light touch it is our view that that it will become increasingly important to demonstrate that individual CDR schemes can deliver the same guarantees of fairness and justice as the courts do if consumer trust and support for ADR is to continue. There is a risk, if approval is too easy, that concerns relating to the so-called legitimacy of many of these schemes will gain prominence, undermining consumer confidence and trust and calling into question any further expansion of alternative forms of justice in relation to CDR. The model therefore provides a helpful framework for competent bodies to demonstrate that the wider considerations of justice are met. Finally, the model is offered as a tool for academic discussion and for providing a framework within which existing CDR scheme designs can be compared and analysed. As CDR develops, both in practice and as a field of academic study, scholars may wish to use the model to support this development through greater engagement with the question of ‘what works’ and as a starting point for the collection of empirical data on effective design.

This conclusion has suggested some ways in which the model might be used and has argued that there would be some advantages in doing so. However, this does not suggest that the model is without limitations nor that it is some kind of panacea. Indeed, the model is currently very much based around ensuring that key questions and design choices are considered by designers, rather than about presenting neat solutions to the problems that designers will face in practice. The model has also been developed as a result of a small case study project and, as acknowledged above, clearly requires further testing and development if it is to meet the needs (p.389) of the various audiences that may find it useful. While the authors have found the North American literature on DSD very useful in focusing attention on the role of designers and highlighting the possibility that design activity can be made more systematic and scientific, we do not suggest that political reality will cease to operate even where such approaches are drawn on. Compromises between the interests and goals of the multiple stakeholders of the CDR scheme will inevitably continue to result in outcomes that are likely to be seen as sub-optimal from a technical design perspective. The authors also recognize that the model and its underpinning logic, may be more applicable and useful in the UK and Commonwealth context with which they are most familiar. While drawing on international case studies, the original research did not consider mainland European examples in significant depth.

Having accepted these limitations, a final question that should be asked is what the ultimate purpose of taking a DSD approach might be in the context of European CDR. Looking ahead, now that the Directive has been implemented, and with a range of data becoming available in due course as the reporting requirements are met, the discussion is likely to turn towards the potential for greater harmonization and more granular questions of scheme design. The existing broad, principle-based approach is likely to continue and to develop, but also to be complemented by a greater interest in the detailed options available for the design of CDR schemes and their relative advantages and disadvantages. DSD approaches, whether in the form of the model presented here, or others that have been offered in the literature, should be playing a key role in these debates and providing both the conceptual and empirical framework within which good design choices are made. European CDR is approaching its next crossroad, with great opportunities available to confirm its success and ascendency, but attendant risks as the spotlight previously focused on the courts turns on to CDR and asks whether CDR can deliver the same levels of justice. DSD, as an attempt to bring science to the existing artistry of CDR design, is one way in which the legitimacy and value of CDR can be shored up and in which the next phase of its development can be discussed and evaluated.

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Notes:

(*) Queen Margaret University, Centre for Consumer Dispute Resolution.

(1) The dispute system design model presented in this article is an elaboration of a model first proposed in C. Gill, J. Williams, C. Brennan, and C. Hirst, Models of Alternative Dispute Resolution: A Report for the Legal Ombudsman (Legal Ombudsman, 2014) and subsequently developed significantly in C. Gill, J. Williams, C. Brennan, and C. Hirst, ‘Designing Consumer Redress: A Dispute System Design (DSD) Model for Consumer-to-Business Disputes’ (2016) Legal Studies forthcoming.

(2) For prominent critiques of the CDR movement see H. Eidenmüller and M. Engel, ‘Against False Settlement: Designing Efficient Consumer Rights Enforcement Systems in Europe’ (2014) 29 Ohio State Journal of Dispute Resolution 261; G. Wagner, ‘Private law Enforcement through ADR: Wonder Drug or Snake Oil’ (2014) 51 Common Market Law Review 165.

(3) For a detailed discussion of the relevant literature see Gill, Williams, Brennan, and Hirst (forthcoming) above (n. 1).

(4) K. Shariff, ‘Designing institutions to manage conflict: principles for the problem solving organisation’ (2003) 8 Harv Negot L Rev 133 at p135 and L. Bingham ‘Designing Justice: Legal institutions and other Systems for Managing Conflict’ (2008) 24 Ohio State Journal on Dispute Resolution 1, p. 10.

(5) W. Ury, J. M. Brett, and S. Goldberg, Getting Disputes Resolved: Designing Systems to Cut the Costs of Conflict. (Jossey Bass, 1988).

(6) The division of the literature into these categories is based on the predominant focus of the literature; in practice most of the works touch, at least to some extent, on the process of DSD and the principles, features, and characteristics of DSD.

(7) J. Macfarlane, Dispute Resolution: Readings and Case Studies. (3rd edn., Emond Montgomery Publications, 2011) p. 579.

(8) Bingham above (n. 4).

(9) J. Lande, ‘Principles for policymaking about collaborative law and other ADR processes’ (2007) 22 Ohio State Journal on Dispute Resolution 619.

(10) H Fader, ‘Designing the forum to fit the fuss: Dispute system design for the state trial courts’ (2008) 13 Harv Negot L Rev 481.

(11) Macfarlane, above (n. 7).

(12) S. Smith and J. Martinez, ‘An Analytical Framework for Dispute Systems Design’ (2009) 14 Harvard Negot L Rev 123 p. 126.

(13) Ury, Brett, and Goldberg, above (n. 5).

(14) C. Costantino and C. Merchant Designing Conflict Management Systems (Jossey-Bass, 1996).

(15) Shariff, above (n. 4).

(16) Based on Koremenos, Lipson, and Snidal’s principles of institutional design in B. Koremenos, C. Lipson and D. Snidal, ‘The Rational Design of International Institutions’ (2001) 55 Int’l Org 761.

(17) M. Barendrecht, ‘In search of microjustice: five basic elements of a dispute system’ (2009) Tilburg University Legal Studies Working Paper No. 002/2009 [online] and M. Barendrecht, ‘Best Practices for an Affordable and Sustainable Dispute System: A Toolbox for Microjustice’ [online], Tilburg University Legal Studies Working Paper No. 003/2009.

(18) V. Bondy and A. Le Sueur, Designing Redress: A Study About Grievances Against Public Bodies (Nuffield Foundation, 2012).

(19) Bingham, above (n. 4). See also her recent work under the name of Amsler: L. Amsler (formerly Bingham) ‘Combating Structural Bias in Dispute System Designs that Use Arbitration: Transparency, the Universal Sanitizer’ (2014) 6 Yearbook On Arbitration & Mediation 32.

(20) Bingham recommends that Ostrom’s Institutional Analysis and Development design framework is used to analyse the key elements of a DSD. See E. Ostrom, Understanding Institutional Diversity (Princeton University Press, 2005).

(21) In the context of workplace conflicts, Bingham here highlights integrated conflict management system, the US ombuds system or contracting out the conflict function Bingham, above (n. 4), p. 36.

(22) For example, whether to use negotiation, mediation, early neutral evaluation, binding, or non-binding arbitration etc.

(23) F. Steffek and H. Unberath (eds.), Regulating Dispute Resolution: ADR and Access to Justice at the Crossroads (Hart, 2013) p. 13–33.

(24) C. Hodges, I. Benöhr, and N. Creutzfeldt, Consumer ADR in Europe: Civil Justice Systems Hart Publishing Ltd., 2012)p. 449.

(25) Ibid., p. 427–8.

(26) P. Cortes, ‘A new regulatory framework for extra-judicial consumer redress: where we are and how to move forward’ (2015) 35 Legal Studies 114.

(27) Department for Business, Innovation and Skills, Government Response to the Consultation on Implementing the Alternative Dispute Resolution Directive and the Online Dispute Resolution Regulation (BIS, 2014), para. 74.

(28) DG SANCO, Study Regarding the Problems Faced by Consumers in Obtaining Redress for Infringements of Consumer Protection Legislation, and the Economic Consequences of Such Problems. (European Commission, 2008); European Commission, Consumer Redress in the European Union: Consumer Experiences, Perceptions and Choices (European Commission, 2009).

(29) The Directive states that disputes should be resolved within ninety calendar days unless they are ‘highly complex’ (Article 8(e)).

(30) C. Gill, J. Williams, C. Brennan, and N. O’Brien, The Future of Ombudsman Schemes: Drivers for Change and Strategic Responses (Legal Ombudsman, 2013) pp. 15–22).

(31) Macfarlane, above (n. 7), pp. 604–9. Smith and Martinez, above (n. 12), p. 129.

(32) Preamble para. 11 and para. 15.

(33) BIS, above (n. 27), para. 28.

(36) Gill, Williams, Brennan and Hirst 2016 (forthcoming), above (n. 1).

(37) MacFarlane, above (n 7), p. 633.

(38) V. Bondy, M. Doyle, and C. Hirst, The Use of Informal Resolution Approaches by Ombudsmen in the UK and Ireland: A Mapping Study (Hot Off the Press, 2014) p. 69.

(39) In the UK, the word ‘Ombudsman’ has been designated as a ‘sensitive word’ under the Companies Act 2006 by virtue of Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014. As a result, from April 2015, a company wishing to use ombudsman in its registered name must, according to guidance from Companies House, meet the following criteria; (a) be certified under the ADR Directive, (b) be a member of the Ombudsman Association at ombudsman level and (c) have a proven track record in dispute resolution normally of at least twelve months. (Companies House Incorporation and Names (Companies House, 2015) p. 51. Available from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/418150/GP1_Incorporation_names_v5_4-ver0.29-4.pdf. For a discussion of the key characteristics of a consumer ombudsman, see C. Gill and C. Hirst, Defining Consumer Ombuds Schemes (forthcoming, Ombudsman Services, 2016).

(40) See MacFarlane above (n.7), p. 648.

(41) A report by the Legal Services Consumer Panel recently criticized the lack of transparency in relation to the data made available from a range of schemes when they sought to benchmark the Legal Ombudsman against others in the CDR sector (Legal Services Consumer Panel, Benchmarking the Legal Ombudsman (LSCP, 2013) p. 37). Bondy, Doyle, and Hirst’s report also highlighted how a lack of agreement on the definition of key terms makes comparisons across schemes very difficult (Bondy, Doyle, and Hirst, above (n. 38), p. 29).

(42) The Directive requires CDR schemes to provide certain information on its website as well as produce annual activity reports. Information to be provided in that annual report includes not only data regarding the number, type, outcome, and time taken to resolve disputes but also any systemic or significant problems identified, compliance rates, and recommendations on how such problems can be avoided or resolved in the future (Article 7(2)). In addition, every two years the ADR entity must provide an additional report to the competent body to include information on the effectiveness of ADR cooperation in relation to cross-border disputes, the training it has provided to those in charge of the ADR entity. (Article 19(3)). If the competent authority identifies that a scheme no longer complies with the Directive’s requirements then the competent authority may withdraw its approval and notify the Commission (Article 19(2)).

(43) Article 19(3).

(44) Article 19(3) states that if an approved ADR entity no longer complies with the Directive then they should be contacted by the competent authority. If they fail to comply within three months then approval should be withdrawn. Garcia has pointed out that the Directive is a little unclear whether competent bodies have any investigation powers and called for national laws to clarify this. E. Vallines Garcia, ‘Impartiality and Independence of the Persons Entrusted with Consumer ADR’ in M. Sturner, F. Gascon Inchausti and R. Caponi (eds.) The Role of Consumer ADR in the Administration of Justice: New Trends in Access to Justice under EU Directive 2013/11 (Sellier European Law Publishers. 2015) p. 95.

(45) For example, it is likely to be easier for competent bodies who also have a regulatory function (such as the Financial Conduct Authority or Ofgem) to take action in relation to this than a competent body (such as the Chartered Trading Standards Institute) which does not.

(46) R. Kirkham, ‘Mapping the New World of Accredited ADR Schemes’ (Blog, UK Administrative Justice Institute, 19 Oct 2015), http://ukaji.org/2015/10/19/mapping-the-new-world-of-accredited-adr-schemes/.

(47) Irish Financial Services Ombudsman Annual Report 2014 (Irish Financial Services Ombudsman, 2015). The Irish scheme is significantly smaller than the UK’s Financial Ombudsman Service, which dealt with 329,509 complaints during the same year, 2014/15. (Financial Ombudsman Service Annual Review 2014/15 (Financial Ombudsman Service, 2015).

(48) Gill, Williams, Brennan, and Hirst, above (n. 1), p. 53. The FSOB’s Annual Report for 2014 indicates that during 2014, twenty-one appeals were heard by the High Court and that a further twenty-five cases were pending including five to the Irish Supreme Court (Irish Financial Services Ombudsman Annual Report 2014 (Dublin: Irish Financial Services Ombudsman, 2015)).

(49) Irish Financial Services Ombudsman Annual Report 2012 (Irish Financial Services Ombudsman, 2013) p. 10.

(50) The decision to use mediation in addition to adjudication relates to process design and is a 2nd order choice in our model. Decisions on the type of process to use and its architecture follow on from the 1st order design choices in our model relating to jurisdiction, funding, governance, accessibility, and dispute resolution philosophy.

(51) Gill, Williams, Brennan, and Hirst, above (n. 1), pp. 52–7.

(52) A different way that schemes can align themselves with the broader dispute resolution philosophy of a scheme was illustrated by the New Zealand Banking Ombudsman Service which is one of a number of schemes who incentivize early resolution through its fee structure by using a sliding scale of fees to ensure that businesses are incentivized to resolve disputes at the earliest stage of the process. See Gill, Williams, Brennan and Hirst, above (n. 1) p. 37–8. A number of Australian schemes use similar incentives (Australian Government, Access to Justice Arrangements: Productivity Commission Inquiry Report (Australian Government Productivity Commission, 2014) pp. 337–8.

(53) Decisions over who decides which process to be used are 1st order choices in our model relating to dispute resolution philosophy. In order to help the case worker reach an adjudication an expert report may be obtained and this occurs in approximately 10% of cases.

(54) They point out that to publish data would be misleading since it would not include non-members and as a result unfairly disadvantage their members, who are at least attempting to resolve any disputes. See Gill, Williams, Brennan, and Hirst above (n. 1), p. 67–9.

(55) Dispute resolution philosophy is the final first order decision in our model.

(56) Eidenmüller and Engel, above (n. 2) and Wagner, above (n. 2). See also M. Sturner ‘ADR and Adjudication by State Courts: Competitors or Complements’ in M. Sturner, F. Gascon Inchausti and R. Caponi (eds.), The Role of Consumer ADR in the Administration of Justice (Seller European Law Publishers, 2015).

(57) Gill, Williams, Brennan, and Hirst, above (n. 1), p. 79.

(58) Bondy, Doyle, and Hirst above (n. 38), p. 51.

(59) Her Majesty’s Court and Tribunal Service Analysis of Qualitative Data: Small Claims Mediation Service (HMCTS, 2012). Even though the figure fell to 85.9% for those whose cases did not settle during mediation, this figure still remains remarkably high.

(60) The design choices here relate to 2nd order choices relating to process options, process and technology architecture and decision-maker attributes.

(61) 89% of people who went through the process said their experience was positive: Financial Ombudsman Service Australia, Annual Review 2012/ 2013 (Financial Ombudsman Service 2013) p.p. 87, http://annualreview.fos.org.au/#folio=89

(62) Gill, Williams, Brennan, and Hirst above (n. 1) pp. 46–7. See also http://www.fos.org.au/.

(63) Panels are chaired by an ombuds person and include a representative from industry alongside a representative with a consumer background.

(64) Other examples of CDR schemes using panel decisions are Geschillencommissie in Holland and, in the UK, the regulator PhonepayPlus discussed below.

(65) Article 5(4)(b) and (f). The Legal Ombudsman has recently consulted on changes to its schemes rules in response to the Directive and how they intend to use subsection (f) as grounds to refuse to deal with a small number of disputes. (Legal Ombudsman, Consultation: Proposed ADR Scheme Rules (Legal Ombudsman, 2015), http://www.legalombudsman.org.uk/wp-content/uploads/2014/09/Consultation-ADR-Scheme-Rules.pdf).

(66) This case study as a result highlights the link between dispute resolution philosophy and powers and scope in our model.

(67) S. Gilad ‘Accountability or Expectations Management? The Role of the Ombudsman in Financial Regulation’. (2008) Law & Policy, 30: 227–53. A recent review of the UK’s Ombudsman Services: Energy highlighted the overlap that can exist between the role of an ombuds scheme and a regulator in relation to tackling systemic issues and some of the uncertainty that exists within schemes in relation to the extent to which they should engage in such activities (Lucerna Partners, Review of Ombudsman Services: Energy. A Report for Ofgem (Ofgem, 2015).

(68) Research for PhonepayPlus found that the average complainant has been overcharged by £32.14 (PhonepayPlus/Jigsaw Research Understanding Consumer Journeys: Premium Rate Services and Micropayment Markets (PhonepayPlus, 2014).

(69) PhonepayPlus makes regular use of their sanctioning powers. In August 2014 they imposed the maximum fine twice. Gill, Williams, Brennan, and Hirst (n. 1) above, p. 64–5.

(70) The decision to use a panel of three relates to decision-maker attributes in our model.

(71) Section 79. The Act came into force on 1 October 2015. Other examples of regulators with redress powers are the Financial Conduct Authority under the Financial Services and Markets Act 2000 and Ofgem by virtue of the Energy Act 2013.

(72) In our research we found that designs tended not to be static and that, particularly for non-statutory schemes, there was frequent procedural experimentation and reform as circumstances changed and new drivers emerged.

(73) For example, the UK’s Financial Ombudsman Service is subject to a regular independent review and Ofgem commission regular independent reviews of the Energy Ombudsman Scheme currently provided by Ombudsman Services: Energy.