Digital Markets, Competition and Consumers Act 2024 (Alternative Dispute Resolution) (Conferral of Functions) Regulations 2026

Lord Fox Excerpts

Wednesday 25th February 2026 Grand Committee

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to my noble friend for introducing the statutory instruments. This is not a very complicated issue and I do not have much to say about it, but I do have one or two questions.

First, this emerged from the digital markets Bill, which I was happy to play a part in. I was a bit surprised to see, on the duty to provide reports, that the reports have to be provided to the Secretary of State in writing on a “durable medium”. I wonder why the Government’s choice of words on this appears to rule out the possibility that we might go digital on these as well as many other things. Will my noble friend reflect on that when he replies?

Secondly, my more serious point is about costs and cost recovery. Clearly, an operation such as this under the CTSI must be paid for, but the way it is framed in the instruments before us means that these fees will come only from consumers. If the ADR is to work effectively, it really should be a benefit to both sides: it should be a benefit to the companies that are being queried about by consumers as well as to the consumers. I understand the point about the consumers being charged only a fair fee—this is well laid out in Schedule 1. Can the Minister say why we are not expecting costs to be recovered from those who also benefit from the system—the companies concerned? Obviously, the last thing we want is to find that this is a huge extra burden on already-burdened consumers, who have to pay through the nose both for their own case but also for the case being answered by the other side.

My third point is more general. There does not seem to be much in the documents before us about reviewing these arrangements. This is quite a big change; it is a measure that will set up quite a complex structure. It will be to the benefit of consumers, and I welcome it, but there is a question about whether it will be reviewed and looked at. Can the Minister reflect on that when he responds?

[Lord Fox (LD)]

My Lords, I am grateful to the Minister for his introduction, which was very clear, and to the noble Lord, Lord Stevenson, who asked some of the questions I was going to ask, which is good. I too worked on the Digital Markets, Competition and Consumers Act 2024. It seems longer ago than 2024, and it took a bit of dredging up to come back to this.

In general, we welcome the idea of strengthening the ADR process and how that might then get more people to use it, rather than go into more lengthy disputes —we can talk about that at the end. In the past, as we hear, there was a voluntary registration system, and it would be interesting to hear about the number of practitioners—it would be useful to know the scale—who will need to be registered. Of those, how many were already registered? Do the ones who are currently registered, having volunteered to register, have to reregister themselves and go through another process? What is the scale of the number of dispute resolution operations that will have to be registered? What is the actual process of registration? Is it, “Fill in this online form and you get your registration certificate over the internet”, or are there four-day visits from 15 inspectors—or is it somewhere between that and Ofsted? There is no sense of the scale of what getting registered will mean or indeed of what the cost of getting registered will be.

We need some sense of the scale of the task that the CTSI will have to undertake, which then raises the question: does the CTSI have the capacity to pick this job up? There will be a big fat bulge of people needing to be dealt with at the front end of this. What happens in the meantime? If I were a currently registered or unregistered practitioner and I put my application into the CTSI, would I not then be able to trade until such time as I had my registration, or is there a grace period through which I could continue to operate until the CTSI had sufficient resources to deal with my case? How does the conveyor belt work and will the CTSI have sufficient capacity to handle what will be a really heavy workload at the front, which will obviously then tail off?

The Minister talked about monitoring, which is an interesting concept. What is the CTSI? It is a group of people. How will they monitor these cases? What data will they use? How will they monitor the process? Will they require certain documentation from their registrants on a regular basis? Will a reregistration process be required after five years, three years or whatever? The monitoring is an important element, but it is not clear to me whether the CTSI has experience in any of this kind of process. It is not an organisation that I know and I do not wish to cast aspersions on it—I am not—but I wonder about it, because it is being thrust into a whole new set of operations.

Will there be a process that can be led, which puts together a register of what these businesses are and promotes that register so that people who are in dispute have somewhere to go? Frankly, if I was in dispute, I would not know off the top of my head that there was an ADR process or where to go to get sufficient help with it. Who has accountability for promoting the process and getting people to use it? Obviously, it is preferable to clogging up the courts with endless cases. As is often the case, in principle this is great but the practice is still a bit mysterious, so I would welcome some answers to those questions.

[Lord Sharpe of Epsom (Con)]

My Lords, I was not involved in the 2024 Act, so—to no doubt universal relief—I shall be very brief. As the Minister explained, the statutory instruments implement Chapter 4 of the Digital Markets, Competition and Consumers Act 2024, by replacing the voluntary accreditation system for alternative dispute resolution providers with a mandatory framework. It grants the Chartered Trading Standards Institute the powers necessary to accredit, monitor and, where necessary, sanction ADR providers and it introduces reporting requirements to ensure transparency and accountability.

I am interested in the answers that I am sure the Minister has ready for the noble Lord, Lord Fox, who raised some interesting practical points. I am also extremely interested to hear what a “durable medium” is.

[Lord Fox (LD)]

It is carved in stone.

[Lord Sharpe of Epsom (Con)]

Paper is not that durable in fire or water, so are we talking stone tablets, or vellum, perhaps? I am very curious to know the answer to the question from the noble Lord, Lord Stevenson.

Obviously, alternative dispute resolution plays an important role in enabling consumers to resolve disputes quickly and without recourse to the courts, so a clear and enforceable accreditation framework should strengthen confidence in that system. On that basis, His Majesty’s loyal Opposition are happy to support these instruments.

[Lord Stockwood (Lab)]

I thank noble Lords for their contributions to the debate. As I stated in opening, the purpose of these instruments is to place the UK’s ADR framework on a stronger footing and to provide a more effective service for consumers and businesses alike. This feeds into the broader work of the DMCCA to bring greater fairness to digital markets and to bolster consumer protections.

I will try to respond to the questions raised by noble Lords today. The most important question, raised by the noble Lords, Lord Stevenson and Lord Sharpe, was about durable mediums. I am reliably informed that this includes digital. We do not have to go as far as stone tablets, as the noble Lord, Lord Fox, suggested. The digital medium is included in that, so that is the acceptable format.

The noble Lord, Lord Stevenson, raised an important question around extra burdens on consumers. Accredited ADR providers can charge a fee only if provisions for doing so are agreed by the CTSI and published. The purpose is to limit fees that consumers may be charged, thereby incentivising the use of ADR. At the same time, this is intended to discourage frivolous claims. Those fees should be up front and should be clear. There is a balance to be struck between ensuring that consumers have adequate access to ADR and that the core costs of the service are covered. We hope that this addresses that balance.

The noble Lord, Lord Stevenson, also mentioned reviewing the regulations. The Government have no specific plans to conduct a post-implementation review of this instrument or the reforms to which it relates, but we will continue to monitor and evaluate the operation of the system of ADR accreditation under the 2024 Act and the provision of the quality of ADR carried out in the UK through the quarterly and annual reports that this instrument requires the CTSI to provide.

The noble Lord, Lord Fox, asked about the capacity of the CTSI, the number of practitioners, how many will have to reregister, the processes and the costs. Those currently registered will go through a light-touch process to transfer their original registration across to the new system. We recognise that this transition period will place some burden on the ADR providers and aim to minimise this. The transition period will be in the region of six months, when ADR providers can continue to operate without the accreditation. In part, this will ensure that current providers and cases can continue without disruption. It will also give the CTSI time to manage the transition. We recognise that this will cause some extra elements of burden, but this seems like the lightest-touch way of transitioning to the improved system.

The noble Lord, Lord Fox, also asked about the CTSI register and about promoting the process. The CTSI currently hosts a list of accredited providers on its website. This will be maintained under the new regime so will remain in place. On the question about how the CTSI is monitored, it is required to provide reports to the DBT SoS on a quarterly and an annual basis. We hope that will be sufficient, but we will be happy to review that if it proves not to be an adequate way of keeping an eye on how things are going.

To conclude, I am grateful for the Committee’s support for this instrument. I beg to move.

[Lord Fox (LD)]

Before the Minister sits down, perhaps he could take this away: simply putting something up on the website—the “If we build it, they will come” approach—is probably not the best way for consumers to know that they have this service. You have to know it exists before you can find it. I suggest that the Minister takes away and discusses with the CTSI and others whether there is some sort of consumer marketing process that can follow once the capacity for ADR is there, so that people actually know it exists. I suspect that nobody knows the organisation exists—or very few people do—and certainly very few people know that ADR is a service on which they can call.

[Lord Stockwood (Lab)]

The noble Lord makes a really important point. Let me take that away and consult with the team and I will come back to him with a response on that.