The Digital Markets, Competition and Consumers Act 2024: Key Changes to ADR Regulation
The UK’s Digital Markets, Competition and Consumers Act 2024 (DMCC Act) introduces significant reforms to consumer protection, competition law, and the regulation of alternative dispute resolution (ADR). A core objective of the legislation is to ensure greater fairness, transparency, and accountability across digital markets and consumer-facing services, including the ADR sector.
Background to the Reforms
Alternative dispute resolution mechanisms have long been promoted as a means to resolve consumer disputes efficiently and cost-effectively without resorting to court proceedings. However, inconsistencies in quality and lack of enforcement power in some ADR schemes have led to concerns about consumer confidence and trust in such processes.
The DMCC Act addresses these concerns by creating a more coherent and enforceable framework for ADR provision, particularly for consumer disputes.
Key Changes to ADR under the DMCC Act
- Mandatory Accreditation and Compliance
The Act empowers the government to impose mandatory accreditation requirements for ADR providers dealing with consumer disputes. These providers must be authorised or certified by an approved body – likely the Chartered Trading Standards Institute (CTSI) or an equivalent authority – to operate lawfully within certain regulated sectors.
- Enhanced Consumer Protection Standards
ADR providers will be required to meet minimum standards relating to independence, impartiality, transparency, and procedural fairness. This includes stricter timelines for resolving disputes, clearer communication obligations to consumers, and improved data handling practices.
- Greater Oversight and Enforcement Powers
The Act grants regulators, such as the Competition and Markets Authority (CMA), enhanced powers to monitor ADR providers, investigate non-compliance, and take enforcement action where necessary. Providers that fail to meet regulatory standards may face sanctions, including removal from approved lists or financial penalties.
- Harmonisation Across Sectors
A key policy aim is to ensure consistency across different consumer-facing sectors, including financial services, utilities, telecommunications, and retail. The DMCC Act provides a legislative basis for harmonising the standards and obligations applicable to ADR bodies, reducing fragmentation in the market.
- Digital Accessibility and Reporting Obligations
ADR providers must ensure that their services are digitally accessible and meet prescribed standards for online dispute resolution (ODR). The Act also introduces mandatory reporting obligations to enhance transparency about complaint volumes, resolution rates, and consumer satisfaction metrics.
Implications for Stakeholders
- ADR Providers will need to assess their compliance status and make operational changes to meet new statutory requirements. Accreditation processes are expected to become more stringent, requiring demonstrable adherence to updated procedural and governance standards.
- Consumers will benefit from a more robust and trustworthy ADR landscape, with access to regulated and quality-assured dispute resolution services.
- Businesses participating in or referring disputes to ADR schemes must ensure that they work with accredited providers and comply with any sector-specific rules introduced under the Act.
Conclusion
The DMCC Act marks a substantial evolution in the UK’s approach to consumer protection and dispute resolution. By tightening the regulatory framework for ADR providers, the legislation aims to boost confidence in out-of-court remedies and support fairer outcomes in consumer disputes. Stakeholders across the sector should prepare for implementation and regulatory guidance expected in the coming months.
