OFCOM consultation on ADR

ADR (Alternative Dispute Resolution) has been a pain in my side, even though we have only had one case. The injustice of that one case in so many ways really hit home for me, and made me re-think my views on justice and fairness.

OFCOM have done a periodic review, and we have replied (here).

Given the importance we place on providing the service we sell, being clear on what we sell, and importantly of the customer service we offer (just see ispreview reviews) it is annoying that we have to contend with ADR at all.

ADR is designed to be unfair, i.e. biased to one side (the consumer) from the start by ensuring fees are paid by ISP regardless of validity of the claim. But it is more so in that the ADR provider has power to decide their jurisdiction, and make up rules as they wish and impose payments. They even impose costs and payments when they agree the ISP is not in breach of contract (a "win" in any "real" court).

There is a lot to be said for ensuring customers have a means to tackle problems with their providers. Ironically, where we (or my family) have been on the other side, arguing with a telco, we have also found ADR lacking! It failed to provide a way to resolve a dispute even though charging the telco!

One of the biggest issues I see of late is that OFCOM propose to allow ADR cases where the customer is unhappy over compensation under new OFCOM proposed automatic compensation. The automatic compensation only applies in some specific cases (e.g. faults must be "total loss of service") which are sensible. But making it possible for someone to go to ADR because they feel they deserve compensation in other cases, or more than prescribed amounts, makes it a waste of time making those rules. ADR costing an ISP over £300 even if they win means customers can just demand amounts up to that and know many ISPs will cave rather than pay more to prove they are in the right. What is worse is that this is beyond what the law requires OFCOM to insist ISPs offer by way of ADR.

We'll see how OFCOM react. We believe ISPA have similar concerns.


  1. IF the Railway companies can own an independent Penalty Fare ADR (IPFAS is owned by SouthEastern), why can't AAISP own it's own ADR?

    1. Largely because the statutory framework would make it basically impossible.

      Currently, it works like this:

      - a provider has to be registered with an ADR provider approved by Ofcom: GC 14.5

      - ADR procedures have to be approved by Ofcom: s52(5)(b) Communications Act 2003

      - Ofcom is not permitted to approve an ADR procedure unless it is "satisfied that the arrangements under which the procedures have effect ... are administered by person who is for practical purposes independent (so far as decisions in relation to disputes are concerned) of both OFCOM and the communications providers to whom the arrangements apply" (s54(2)(a) CA 2003

      A provider running an ADR scheme for their own complaints is unlikely to be consistent with this requirement of independence.

    2. However, Independent Penalty Fares appeal bodies have a similar requirement, and yet SouthEastern gets to do its own

      SRA Penalty Fares policy, Para 4.40

      The Independent Penalty Fares Appeals Service (IPFAS)
      4.39 Every penalty fares scheme which has so far been approved has arranged for appeals to be dealt with by the Independent Penalty Fares Appeals Service (IPFAS), in line with the IPFAS code of practice. We have approved this code of practice for the purposes of rule 9.
      4.40 IPFAS is managed by Connex SouthEastern Ltd, but as a separate unit whose management does not report to the commercial director. When the Regulator asked for opinions from the public and the rail industry a few years ago, most people agreed that appeals must be dealt with independently and consistently, but there was little agreement on what the practical arrangements should be. Some people questioned the need to change what was already in place. Without a practical alternative offering any clear advantages, we believe that the current arrangements are satisfactory, as long as IPFAS:
      • remains a separate unit, with its own accounts and a line management that does not report to the commercial director;
      • continues to decide appeals in line with a set of specific criteria which we have approved;
      • continues to be funded independently of the outcome of the appeals it processes, for example, by receiving a set fee for each appeal, no matter whether that appeal is accepted or turned down; and
      • continues to receive enough funding to carry out its functions, while costs are fairly distributed between operators using the service. To make sure that this is the case, we have agreed the charging arrangements between IPFAS and the operators who use the service.
      4.41 We recognise that there may come a time when operators may want to change these arrangements. However, existing penalty fares schemes will need to be changed to reflect the new arrangements. We will need to be sure that the new arrangements are in place and are satisfactory before we approve any changes.

      Could not a similar division/scheme be devised with OFCOM for ADR based on the Southeastern/SRA precedent and model?

    3. Interesting!

      My feeling is that Ofcom probably wouldn't go with it, but always helpful if there's something comparable in case someone does want to try it :)

  2. Forgive my total ignorance. What happens if a CP simply declines to pay up when an unfair charge is imposed on them? (And says “see you in court”.) Just out of interest, as I have absolutely no idea how these things work.

    1. AFAIK it can mean a heart fine from OFCOM for not adhering to GCs and ultimately withdrawal of implicit licence to operate a telecommunications system, making continuing to do so criminal.

  3. Sounds like we just need an ADR provider that is not incompetent or bent. Setting one up would be a very good idea, it would just need to be done by a friend who doesn't work for AA and perhaps is not married to RevK or anything like that. I don't think we have written off Chad H's idea. It could be someone with a published ethical statement.


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