The Consumers Council has recommended revising and improving consumers’ ability to resolve disputes with traders in Hong Kong. At present, aggrieved consumers’ options include presenting complaints to the Consumer Council for resolution and making recourse to formal legal proceedings to resolve disputes. However, on 31 August 2016 the Consumer Council published a study which considers the adequacy of the current framework.
The report notes that between 2011 and 2015, the Consumer Council handled more than 95,000 complaints from consumers. While more than 70 percent of the cases were resolved, a substantial minority of complainants (approximately 5,000 per year) faced a choice of either giving up their complaint or initiating legal proceedings.
The report considered that this pool of complainants would find litigation expensive, lengthy and disproportionate to their claims. Given this, the report proposed the establishment of an inexpensive, expeditious and effective adjudicative option to provide such consumers with appropriate redress.
In light of these findings, the Consumer Council has proposed to establish a Consumer Dispute Resolution Centre (“CDRC”). The CDRC envisaged by the Consumer Council would be Government funded and be capable of both providing preliminary legal advice to consumers as well as a dispute resolution mechanism on a “Mediation First, Arbitration Next” model in a manner more efficient and cost-effective than litigation.
- no charge for consumers to use the initial services offered by the CDRC;
- amounts handled by the CDRC to be capped at HK$200,000;
- prohibition of legal representation during the process of mediation initiated by the CDRC; and
- introduction of mechanisms to allow the Consumer Council and the Judiciary to refer consumer disputes to the CDRC.
Similar bodies are already operating with success in other jurisdictions around the world. For example, in the UK, the Financial Ombudsman Service provides financial institutions and consumers with a forum by which complaints can be resolved and, potentially, determined without involvement of the court. While not without its critics, the Financial Ombudsman Service currently resolves around 100,000 disputes each year.
Whether or not a CDRC or equivalent body might ultimately be instituted in Hong Kong is uncertain. Indeed, the Consumer Council has recognised that the report represents the beginning of a dialogue amongst all relevant stakeholders in relation to improving the dispute resolution regime for consumers and traders in Hong Kong. Legal practitioners will no doubt watch developments with interest but will also take comfort.