The Digital Markets, Competition and Consumers Act 2024 took effect on 6 April 2026 and introduced changes to the rules for alternative dispute resolution of disputes arising under consumer contracts.
Alternative dispute resolution (ADR) refers to the methods that can be used to resolve disputes outside of formal litigation (such as mediation or arbitration). The appropriate ADR route will depend on the nature and value of the dispute and the relationship between the parties. We discussed some of the main forms of ADR in this previous article.
The Consumer ADR Regulations (Regulations) were implemented into UK law in 2015 and introduced a framework which encouraged the use of ADR by ensuring that customers were made aware of the alternatives to litigation. One of the key obligations for businesses under the Regulations was a requirement to notify customers of ADR when responding to a complaint. However, businesses were not required to participate in the ADR schemes they referred customers to and meaning they could fulfil this obligation by referring customers to ADR methods that they had no intention of engaging with.
This element of the Regulations has now been revoked and replaced with the Digital Markets, Competition and Consumers Act 2024 (DMCC). Rather than requiring businesses to notify customers about ADR generally, they now only need to notify customers of any ADR that is available to them when responding to a complaint. In other words, businesses do not need to notify customers about ADR unless they are already committed or obligated to engage in it (e.g. by separate law or contract).
In practice, ADR already plays an important role in regulated sectors (such as financial or telecommunication services) as disputes are often referred to an ombudsman that can provide independent and binding decisions. However, even if ADR is not mandatory, businesses should consider ADR at an early stage in a dispute as some court decisions have been influenced by a party’s unreasonable refusal to engage with ADR, even where it has been successful in the litigation.
ADR can be beneficial for both parties as it is typically a quicker and more cost-effective route than litigation and gives the parties flexibility in how the dispute is resolved because they can agree to a solution that might not be available through the courts. The growth of Online Dispute Resolution (ODR) has also made ADR more accessible as parties can resolve a dispute entirely online. This makes it particularly suitable for low value claims.
Although the DMCC has streamlined notification requirements, businesses should continue to take a proactive approach to ADR and ensure that it is included within its internal complaint procedures. Being able to demonstrate a proportionate and practical approach to ADR will reduce the risk of the court applying sanctions should the dispute ultimately proceed to court.
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