Alternative Dispute Resolution Explained

The main types of Alternative Dispute Resolution available in the UK are:

• Mediation: A neutral mediator facilitates discussion between the parties to help them reach a voluntary agreement. The mediator does not decide the outcome — the parties do. Mediation is non-binding unless the parties enter into a formal settlement agreement. It is widely used in family disputes, neighbour disputes, and commercial disputes.
• Arbitration: A neutral arbitrator (or panel) hears both sides and makes a binding decision. Both parties agree in advance to accept the outcome. Arbitration is used in commercial contracts, construction disputes, and certain consumer sectors. The decision is enforceable in the same way as a court judgment.
• Adjudication: Similar to arbitration but faster — widely used in construction disputes. The adjudicator's decision is temporarily binding (it can be challenged later in court or arbitration).
• Ombudsman schemes: A type of ADR specific to regulated consumer sectors. Ombudsman decisions are binding on the company but not on the consumer — the consumer can still go to court if they reject the decision.

In many regulated consumer sectors, businesses are required to belong to an approved ADR scheme. These schemes are free to consumers and provide binding or influential resolutions:

• Financial services: Financial Ombudsman Service
• Energy: Energy Ombudsman
• Telecoms: CISAS or Ombudsman Services: Communications
• Motor trade: The Motor Ombudsman
• Property: The Property Ombudsman (for estate agents), Property Redress Scheme
• Travel: ABTA dispute resolution
• Legal services: Legal Ombudsman

For sectors without an approved scheme, the courts remain the primary route, though parties can voluntarily agree to use any ADR process.

ADR is usually preferable to court proceedings where:

• The dispute involves an ongoing relationship you wish to preserve
• A free sector ADR scheme is available
• Speed and cost are important — mediation and adjudication are typically much faster than court
• Confidentiality is important — court proceedings are usually public; ADR is usually private
• The amount in dispute is small (below the small claims track limit of £10,000), making court costs disproportionate

Court proceedings should generally be used when a binding precedent is needed, an injunction is required, or ADR has been attempted and failed.

The following is a sector-by-sector guide to the principal approved ADR providers and ombudsmen in the UK. Where a scheme is mandatory for businesses in that sector, consumers have a right to use it regardless of whether the business agrees. Where a scheme is voluntary, both parties must agree to use it.

Financial services (banking, insurance, investments, mortgages, credit): The Financial Ombudsman Service (FOS) is the mandatory ADR scheme for complaints about FCA-regulated firms. It covers banks, building societies, insurers, mortgage lenders, investment advisers, credit card companies, and payday lenders. The FOS is free to consumers. Decisions are binding on the firm if accepted by the consumer. Website: financial-ombudsman.org.uk.

Energy (gas and electricity): The Energy Ombudsman is the mandatory ADR scheme for complaints about gas and electricity suppliers and network operators. All Ofgem-licensed suppliers must belong to an approved scheme. Decisions are binding on the supplier if accepted. Website: energyombudsman.org.

Telecoms (broadband, mobile, landline): There are two approved ADR schemes for telecoms disputes — CISAS (Communications and Internet Services Adjudication Scheme, operated by CEDR) and Ombudsman Services: Communications. Ofcom-regulated providers must belong to one of these. Check your provider's terms to confirm which scheme they use. Both are free to consumers.

Property (estate agents and lettings agents): Estate agents in England and Wales must belong to a Property Redress Scheme. The two approved schemes are the Property Ombudsman and the Property Redress Scheme. Both handle complaints about estate agents, lettings agents, and property management companies. Membership is mandatory under the Consumers, Estate Agents and Redress Act 2007.

Motor trade (car dealers and repairers): The Motor Ombudsman covers disputes with car dealers, vehicle manufacturers, warranty providers, and garages. Membership is voluntary for dealers, so check whether your dealer is a member before relying on this route. The Motor Ombudsman's website has a searchable database of members.

Legal services: The Legal Ombudsman handles service complaints about solicitors, barristers, licensed conveyancers, will writers, and other regulated legal service providers in England and Wales. Consumers must have received a final response or waited at least eight weeks before the Legal Ombudsman will accept a referral. Website: legalombudsman.org.uk.

Water: The WATRS (Water Redress Scheme) handles complaints about water and sewerage companies in England and Wales after the Consumer Council for Water (CCW) has investigated them. Awards up to £5,000. See also the main CCW complaints route at ccwater.org.uk.

Rail: The Rail Ombudsman handles complaints about train operators and Network Rail after the operator's internal process has been exhausted. Transport Focus can also assist with escalating rail complaints. Website: railombudsman.org.

New homes: The New Homes Ombudsman Service handles complaints from new home buyers about housebuilders who are members of the scheme. The scheme was established under the Building Safety Act 2022 and provides binding decisions on service disputes with registered housebuilders.

Aviation: Airlines operating in the UK must belong to an approved ADR scheme under Civil Aviation Authority (CAA) requirements. The two main schemes are the Aviation ADR scheme (operated by CEDR and CDRL) and the AviationADR scheme. Check your airline's terms to identify which scheme they use before raising a flight delay or cancellation dispute.

Construction: The main ADR route for construction disputes is adjudication under the Housing Grants, Construction and Regeneration Act 1996, which applies to most construction contracts. The RICS, CIArb, and CIOB all maintain panels of adjudicators. For consumer disputes about builders and tradespeople, the Dispute Resolution Ombudsman and various trade association schemes (such as FENSA for glazing and Gas Safe for gas work) are also available.