NEW EU FRAMEWORKS FOR CONSUMER COMPLAINTS: TIME FOR AN AIR OMBUDSMAN?

Transcription

1 NEW EU FRAMEWORKS FOR CONSUMER COMPLAINTS: TIME FOR AN AIR OMBUDSMAN? Professor Christopher Hodges MA PhD FSALS Head of the CMS/Swiss Re Research Programme on Civil Justice Systems, Centre for Socio-Legal Studies, University of Oxford Life member, Wolfson College, Oxford Erasmus Professor of the Fundamentals of Private Law, Erasmus University, Rotterdam Honorary Professor, China University of Political Science and Law, Beijing Guest Professor, Wuhan University Solicitor of the Superior Courts of England and Wales

2 The Problems 1. Consumers sometimes have disputes with traders 2. Resolving consumer-to-business (C2B) disputes is important 1. Access to justice 2. Confidence in traders and the market 3. Typical C2B disputes involve very small sums 4. Court systems are not attractive for C2B disputes 1. Too slow, costly, not user-friendly 2. Small claims and class actions 5. Alternative mechanisms and techniques work for C2B disputes 1. Alternative dispute resolution (ADR) 2. Consumer ADR (CDR) 3. Online dispute resolution (ODR) 4. Regulatory redress

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5 France Telecoms: 3 Insurance: 3-6 Banks: 6 GDF/SUEZ: 2 Travel: 2-4 National Energy mediator: 6 Germany Telecoms: 4 Insurance:4.1 Banks: no data Travel: 3 Poland Telecoms: no data Consumer arbitration tribunals: Banking: 1.1 Trade inspection consumer: no data Energy: no data Spain Telecoms: no data Insurance /pensions: 4 Banking: 4-6 Investment: no data Energy: 2 UK Telecoms: 6 or less Pensions: 10.9 Banks/Insurance: 2.2 FLA: 2 Energy: xx Travel: 2-2.5

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8 ECC-Net cross-border complaints by sector, Annual Report 2012 Main economic sectors concerned by complaints Transport, of which: - Air transport (including problems with luggage) - Car rental Percentage 32.1% 21.6% 3.4% Timeshare related products and package holidays 7.4% Recreational, sporting and cultural services 7.0% Furnishing, household equipment and routine household maintenance 6.8% Audio-visual, photographic and information processing equipment 5.6% Health 5.1% Communication 4.7% Clothing and footwear 4.5% Hotels and restaurants 4.5% Personal care goods and services 3.0% Financial services and insurance 2.5%

9 European Commission Recommendation on Collective Redress, May 2013 Every Member State should have a collective action procedure by 2015 Major features: Standing: Member States to designate representative entities Initial verification of admissibility Dissemination of information about a collective action Loser pays rule Claimant to declare source of funding Court can stay if funding insufficient, or conflict Third party funder should not influence procedural decisions Opt-in in, unless opt-out justified Encourage ADR settlement Lawyers fees not unnecessary incentive to litigation No contingency fees, except exceptionally No punitive damages Mass claims only after public enforcement has concluded Registry of collective actions

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11 ADR - EU Development and Mechanisms Council Resolution of 25 May 2000 on a Community-wide network of national bodies for the extra-judicial settlement of consumer disputes, [2000] O.J. C 155/1 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, Financial Services Complaints Network, FIN-NET, 2001 European Code of Conduct for Mediators, 2004 Commission Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters, [2008] O.J. L 136/3 Directive of the European Parliament and of the Council on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR), 2013/11/EU Regulation 524/2013 of the European Parliament and of the Council on online dispute resolution for consumer disputes (Regulation on consumer ODR), 2013

12 Measures that encourage Member States to establish ADR schemes Distance Marketing of Financial Services Directive 2002/65/EC Timeshare Directive 2008/122/EC E-commerce Directive (EC) 2000/31 Postal Services Directive EC) 2008/6 amending 97/67/EC Insurance Mediation Directive 2002/92/EC Markets in Financial Instruments Directive (MiFID) (EC) 2004/39 on markets in financial instruments amending 85/611/EEC, 93/6/EEC and 2000/12/EC and repealing 93/22/EEC

13 Measures that require Member States to establish ADR schemes Directive (EC) 2009/136 amending Directive 2002/22/EC on universal service and users rights relating to electronic communications networks and services Directive (EC) 2009/72 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC, [2009] OJ L211/55; and Directive (EC) 2009/73 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC Directive (EC) 2008/48 on credit agreements for consumers Directive (EC) 2007/64 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC Regulation (EU) No 181/2011 on bus and coach passenger rights [complaints function either in house or external; also complaints and enforcement authority]

14 ADR - Passenger Aviation Regulation (EC) 261/2004 Right to care and fixed compensation for denied boarding and cancellation etc Revision 2014 Some reference to ADR What is special about any sector? Is not every sector the same?

15 The Value of CDR More attractive and cheaper for users than courts Often free to consumers businesses fund the CDR system Regulation of market behaviour: capture of complaint data aggregation identification of issues and trends publication enable regulatory action NB Dir 2013/11 art 17 Collective redress by CDRs + Regulators Swifter identification of a systemic issue Application of a generic solution

16 The EU Vision for CDR A comprehensive pan-eu system of CDR bodies, in every Member State, covering every type of C2B dispute Free to consumers, or minimal cost (art 8 (c)) Quality of CDR bodies to be ensured by regulation: Oversight by national competent authorities (art 18), and Criteria Expertise, independence and impartiality (art 6) Transparency (art 7) Effectiveness (art 8) Fairness (art 9) Liberty (art 10) Legality (art 11) For cross-border disputes, an ODR platform

17 Architecture of Consumer ADR Competent Authority Consumer ADR(s) Traders

18 Architecture of Cross-Border Intra-EU Consumer ADR ODR Platform Consumer CDR Trader

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20 CDR obligations on traders Directive 2013/11/EU does not oblige traders to participate in CDR: This Directive does not require the participation of traders in ADR procedures to be mandatory or the outcome of such procedures to be binding on traders However, traders should be encouraged as far as possible to participate in ADR procedures (recital 49) Obligation to inform consumers about the ADR entity(s) by which the trader is covered, when those traders commit to or obliged to use those entities to resolve disputes with consumers on website in general terms and conditions or service contracts (art 13). But: Member States shall facilitate access by consumers to ADR procedures and shall ensure that disputes covered by this Directive and which involve a trader established on their respective territories can be submitted to an ADR entity.. (art 5.1) NB This is a first step: expect evolution

21 Historical evolution of CDR and some different national models Courts: Procedural Justice Arbitration: panels of 3 Spain Nordic Consumer Complaint Boards Netherlands Geschillencommissie UK Self-regulatory systems (Codes) and hybrids Mediation: In civil procedure French médiateurs: in companies Some CDR in ministries/regulators Public Ombudsmen: UK and Germany privatised, regulated industry sectors and/or private sector Ombudsmen: single case handlers and ombudsmen

22 Techniques: an escalating pyramid Adjudication binding or non-binding Mediation/ Conciliation Refer to Third Party: Triage Direct contact Consumer - trader

23 Differing National Architectures of CDR Diversity can/should it be harmonised? Not in this Directive How should governments fill in the gaps? Various options An opportunity to reform CDR landscapes Modernisation: eg Sectoral code-based arbitration schemes to ombudsman? Rationalise: advice and complaint functions: regulator, ADR/ombudsman, or Citizens Advice? Wider reform of Legal Systems

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26 Netherlands Model GCS

27 UK and Germany Model

28 Consistent fall in Court claims

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30 United Kingdom 2010 data Ombudsman Services: Communications 2010 complaints data FOS

31 A Possible Legal Landscape Public Services Consumer Services Personal Injuries Family Employment Commercial IP

32 Tiers of Market Information Internatio nal Regulators CDR seamless service: sectoral + residual Traders internal systems to collect and respond to customer feedback and complaints

33 About söp Conciliation Body for Public Transport since 2009 Gemeinsam Lösungen finden

34 About söp The conciliation procedure 1. Complaint to the company not successful 2. Conciliation request to söp (preferably online) 3. Statement of the company Opportunity to immediately accept the passenger s claim Otherwise statement with regards to facts 4. Examination of individual case by söp Legal aspects and other facts Request for additional information/documents Consideration of possible solutions 5. Conciliation proposal (sent to both parties) 6. Acceptance of conciliation proposal by both parties (2013: >80 %) or failure Gemeinsam Lösungen finden

35 [Lack of experience and acceptance of CDR by airlines] CDR is too expensive It only costs money for the industries without any added value. CDR lacks special expertise Aviation demands technical knowledge which is too complex for CDR. CDR is biased Only the consumer s interest and not the airline s view is considered. CDR is not necessary Airlines are service-minded and know best how to satisfy their customers. Gemeinsam Lösungen finden

36 How to make airlines accept CDR? New legal requirement since November 2013 German Air Traffic Act (Luftverkehrsgesetz), Sec. 57 ff : Flight passengers have guaranteed access to CDR. + Airlines have to fund CDR procedures. + Submission under a public (residual) scheme for airlines which do not participate in private CDR. Gemeinsam Lösungen finden

37 How to make airlines accept CDR? Experience of most airlines Within the first months, already more than 1,500 procedures for airlines, such as : Gemeinsam Lösungen finden

38 How to make airlines accept CDR? Acceptance by most airlines Feed-back from the airlines : We have to admit that your conciliation proposals are well-balanced and not only considering the consumer s perspective. My boss said that we should get more cases to söp. If a passenger is not satisfied with our decision, we suggest conciliation at söp. We are impressed by the expertise and sector-specific knowledge of the söp team. How can we advise more passengers to contact söp? Gemeinsam Lösungen finden

39 How to make airlines accept CDR? Acceptance by the airlines Even if a conciliation proposal is rejected on merits, passengers show their gratitude : Thank you (...). I appreciate the thorough explanations very much. They helped me to understand the legal background What a pity that my request was not successful. However, I like your ideas and statements! I didn t understand the term RIT-Reise and was not aware of the special conditions. After reading your letter, it is easier for me to accept the company s decision... Gemeinsam Lösungen finden

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41 CDR Issues for the Aviation Sector 1. Should CAA cease its complaints function? 2. Should airlines establish/join a CDR? 3. What model: sectoral med-arb or ombudsman? 4. How many national CDRs are needed in a business sector that operates internationally? [national, European, global] 5. Should joining CDR be mandatory? 6. Should adherence to awards be mandatory? 7. How should CDR be funded? 8. Should CDR be free to consumers? 9. If CDR is to be the model, what effect does this have on the substantive rules on compensation? Should they be changed? 10. How many wheels do not need to be (re)invented?

42 Conclusion CDR is a technique that is good for consumers traders markets and economic prosperity CDR is here to stay How are companies going to respond to ensuring high levels consumer care?