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Complaints, Consumer-citizens, European Union, Human rights/equalities, Mediation and ADR, Ombuds and reviewers, Reports & Publications, Research, Social security and welfare benefits, System design

The ESRC Just Energy project

The ESRC Just Energy project

By Chris Gill (University of Glasgow) and Naomi Creutzfeldt (University of Westminster)

This blog post summarises the findings of our ESRC-funded Just Energy project and outlines the main arguments in our forthcoming book on Access to Justice for Vulnerable Energy Consumers in Europe.

Our starting point for this project, four years ago, was the recognition that vulnerable and energy-poor consumers in the European Union (EU) faced significant barriers in accessing justice. We use the term vulnerable consumers in this blog to mean consumers in vulnerable circumstances. Vulnerability may arise as a result of membership of a particular group, changing life circumstances (illness, bereavement, etc), and market characteristics (e.g. where consumers are engaging with a market that is complex and which puts them at disadvantage). Among the solutions offered to remedy the failings of existing systems of justice, alternative dispute resolution (ADR) has featured prominently.

With promises of cost-savings, increased party satisfaction and longer-lasting conflict resolution, policymakers in Europe are seeking to boost ADR provision, at the same time as reducing access to courts. This has been particularly evident in relation to consumer-to-business disputes, where a large-scale shift has occurred towards resolving disputes out of court through the implementation of the consumer ADR Directive (2013/11/EU).

While the development of ADR has been welcomed in some quarters, there is a lack of empirical evidence regarding the access to justice benefits that have accrued from it, especially for those who are most vulnerable. Our research project aimed to fill this gap. It explored current barriers to access to justice for vulnerable and energy-poor consumers and asked how effective ADR is in providing access to justice.

The project used qualitative methods in five case study jurisdictions: the UK, France, Italy, Catalonia, and Bulgaria.

Findings: the access to justice gap remains

Our project found that despite ADR now being the dominant form of dispute resolution available to energy consumers, it fails to reach the most vulnerable and those most in need of justice. Rather, ADR is an ‘elite’ remedy that serves a narrow demographic and which is largely reactive to the needs of individuals with significant intellectual, financial and personal resources.

While ADR can make a difference for those who use it, this helps only the rare consumers who make it all the way to an ADR provider. There are a number of barriers that stand in the way of using ADR, and many of the theoretical benefits of ADR have yet to break those barriers down.

In terms of enhancing access to justice, much depends on the particular form of ADR that is deployed and the motivations behind that deployment. If access to justice is a principal driver and sufficient attention is paid to principles of good dispute system design, then we argue that ADR has significant potential to improve access to justice.

A way forward: holistic access to justice

We put forward a number of recommendations to help enhance the contribution of ADR to access to justice for vulnerable and energy poor consumers. First, we argue that the ombuds model (rather than other forms of ADR) should provide the starting point for reform. The ombud’s ability both to provide advisory functions to consumers and feedback to industry and regulators are key value-adding features, which go beyond more basic models of ADR that focus only on dispute resolution. However, the ombuds model is not a panacea and even here there is variation in practice.

Indeed, at a conceptual level, our major recommendation is that access to justice policy should become more inclusive, preventative, and therapeutic. This would involve ensuring access to justice for the most vulnerable groups (i.e. those who typically do not complain), seeking to ensure that consumer problems do not arise in the first place or are prevented as close to the ground as possible.

Such an approach would go hand in hand with seeking to include consumers in policymaking and in the design of ADR institutions, to ensure that the needs of vulnerable consumers are at the heart of policy rather than an after thought. In terms of the design of ADR we offer three specific reform proposals.

Option 1: Improve the ‘Supply’ of ADR

This option involves developing the procedures used by ADR bodies to provide greater flexibility and greater sensitivity to diverse and vulnerable consumers’ needs. This would require knowing more about the circumstances of consumers, both those who are currently using ADR and those who are currently not using it.

It would also require the adoption of clear definitions of consumer vulnerability and energy poverty, which can be operationalised and used to target effort and resources. More flexible, more inclusive, and less legalistic and bureaucratic processes have the potential to be more attractive to a broader range of users who might currently feel that seeking third-party help is not for them.

Option 2: Increase the ‘Demand’ for ADR

This option involves seeking to stimulate demand for ADR among vulnerable and energy-poor consumers. This might involve direct outreach and education interventions (such as advertising, roadshows, the production of leaflets etc.) as well as seeking to work more closely with intermediaries. Despite the low public profile of ADR, attempts at raising awareness have been relatively limited. Many ADR schemes have been reluctant to take proactive measures to increase complaint numbers in order to avoid accusations of ambulance chasing and empire building.

Promotion could also lead to surges in demand that would present significant operational challenges for ADR bodies. The effect has been that ADR bodies tend not to be well known, and this position has been largely accepted rather than considered a priority for change. Indeed, the relatively low usage of ADR and the narrow demographic of users does not seem to have been at the forefront of ADR bodies’ concerns.

Option 3: Decrease the ‘Demand’ for ADR

This option involves reducing the demand for ADR by seeking to ensure that, as far as possible, problems do not arise in the first place. This would involve a number of aspects.

One these involves working with intermediaries and the third sector. Some of these actors will have cross-cutting agendas (such as general consumer advice, debt, housing) while others may have energy-specific remits (e.g. energy charities and NGOs). Rather than seeing these organisations only as referral agencies that can signpost to ADR, attention could be given to create stronger and more integrated links.

Since people’s problems do not occur within neat forms that match up with the remits and responsibilities of particular organisations, a key part of providing meaningful justice for vulnerable and energy-poor consumers is for organisations to collaborate to deal with issues in a more holistic way.

Other proposed reforms draw inspiration from the way in which public ombuds operate. There is widespread agreement in the literature that access to justice in the consumer context cannot be realised through individual dispute resolution alone. Instead, and in keeping with our holistic vision of access to justice, an emphasis is needed on the delivery of collective redress, as well as individual dispute resolution.

There are three aspects of public ombuds’ role that we consider should be explored in the consumer context: a policy advocacy role; a systemic investigation role; and a Complaints Standards Authority (CSA) role.

The first approach involves ADR becoming more ‘vocal’ in policy debates. Going in tandem with a higher public profile and a more obviously pro-consumer orientation, ADR bodies in the energy sector should have a role in advocating the rights and interests of consumers to industry, regulators, and government. This would be similar to the role of some public ombuds in advocating human rights or children’s rights.

The second approach involves adopting a model used by ombuds in Scotland, Wales, and Northern Ireland – the so-called Complaints Standards Authority. This involves the ombuds setting complaint standards, monitoring their implementation, and promoting best practice in complaint handling within government.

Developing this role has huge potential to enhance access to justice in consumer contexts where ‘the corporation is the courthouse’ (Comment by Van Loo reported in E Deason, M Green, D Shestowsky, R V Loo and E Waldman, ‘ADR and Access to Justice: Current Perspectives’ (2018) 33 Ohio State Journal of Dispute Resolution 303). Most people who complain do so to their energy supplier rather than an ADR body. Working behind the scenes with energy companies rather than seeking to attract consumers directly may, therefore, be more effective.

Finally, the ombud could be given the kind of own-initiative investigation powers that most public ombuds have. This would allow for system-wide issues to be investigated without a complaint from a consumer having been received. There are three arguments for doing this: passive complaining behaviour and the significant unremedied detriment that results from this; the particularly low likelihood of complaints being made by vulnerable individuals and groups; and the potential to capitalise on under-developed added-value features of the ombuds institution.

The particular value of giving the ombuds such powers, in a public sector context that features a range of other mechanisms such as audit, inspection and (some) sectoral regulation, is that the ombuds has a unique focus on fairness in administrative processes and also has an important role to play in examining and trouble-shooting internal redress mechanisms. These arguments apply equally to the energy sector, given its status as a service of general interest, the strong public interest in energy, and the substantial element of public regulation of the energy market.

While such an expansion in the role of ADR bodies potentially overlaps with other approaches to regulating energy providers and providing collective redress, we argue that ADR can play a distinctive role as part of a more integrated and holistic system of consumer redress.

Conclusion

Much of the potential of ADR in delivering access to justice for vulnerable energy consumers remains unrealised and depends on the way in which ADR is designed. Our book argues that there are significant benefits in the ombuds’ ability to fulfil not only core dispute resolution goals, but also to contribute to market regulation and add value to each of the pillars of the consumer protection landscape.

That said, three issues remain. The first is that the potential value of the ombuds model has not yet been shown empirically, and its benefits remain largely theoretical.

The second is that there remain significant variations in practice among ombuds, so that, although a broad model can be identified, there is likely to be significant variation in terms of how much ‘added value’ particular ombuds aim to deliver.

The third, and most important, is that there is little evidence that the access to justice challenge is being grasped and prioritised by ombuds: like other aspects of the ADR landscape, they remain little used and the demographic of users remains stubbornly narrow and unrepresentative.

As result, we have suggested a more holistic approach, which involves developing a more inclusive, preventative, and holistic pathway for access to justice policy that involves and prioritises the needs of vulnerable individuals.

More specifically, we have suggested three options for enhancing the contribution of ombuds, by improving how they cater for vulnerable people, by seeking to engage more vulnerable people in using their service, and finally by taking on a much more strategic and collaborative role in order to meet people’s needs.

This work was supported by the Economic and Social Research Council [grant number ES/P010237/1].

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