What SMEs need to know about the new retail ombudsman

The introduction of the UK's first retail ombudsman may have passed some by. But it's well-worth catching up on, say Boost Capital.

The month of January can bring a hangover for retailers. Typically, trade slows after a busy December as people tighten their belts.

Customer complaints increase due to disappointment over Christmas gifts, late deliveries, and the hassle of returning unwanted presents. And, as of this year, consumers have an official place to go to pursue their shopping-related grumbles.

January 2 saw the launch of the UK’s first ever Retail Ombudsman (TRO) service. Membership of the independent body is voluntary, and many of the 3,000 names that have signed up so far are bigger brands. But SMEs could benefit, too, and are invited to join to show they’re just as professional as their larger rivals. So, what’s involved for smaller operators that want to be part of the scheme?

What The Retail Ombudsman Does

The core purpose of the new ombudsman service is to resolve disputes between customers and retailers. Whether it’s goods or services bought by an individual either in a bricks and mortar premises or online, if someone isn’t satisfied they can now seek free help from the intermediary. And the hope is that the scheme will help retailers, too, with tricky, time-consuming or misguided complaints.

It’s already proving popular. More than 100 complaints were filed on the TRO website on its launch day, and it predicts it’ll handle more than 100,000 before the year is out. Thus far, most submissions have been about deliveries and returns of Christmas presents, mislabelling, and damaged packaging.

There are some conditions to the TRO getting involved in a disagreement:

  • The watchdog can only intervene in a significant way if the retailer concerned is a signed-up member of the TRO. Non-member businesses that are reported may receive a letter from the ombudsman advising them to review any unfair decision towards a customer. But the TRO has no further powers of action if the advice is ignored.
  • Customers must have already issued a complaint direct to the retailer in question – and given them up to eight weeks to respond – before approaching the ombudsman.
  • Once consumers have received the retailer’s response they have up to six months to pursue their grievance with the TRO.
  • Purchases must have been made on or after December 1, 2014.

Once the TRO takes on a case, an independent case worker is assigned, and both sides of the argument are closely scrutinised. When all of the relevant information has been studied, the TRO official will put forward a recommended solution to the consumer and retailer. If the watchdog backs the customer, the retailer should follow the steps suggested, and pay a £45 complaint handling fee. When a complaint is found to be spurious or without merit, no charge is made – though the shopper could still opt to take the case to court if so desired. If either party rejects the suggested resolution, then the complaint is passed to the Chief Ombudsman who is a qualified lawyer and can rule on the issue. 

The benefits for SMEs of membership

Many business owners may think there’s limited advantage in joining such a scheme. But the TRO suggests that retailers – particularly smaller ones – could experience lots of benefits from signing up to the register.

  • Sending a message about customer service. Being able to advertise that you’re a member of the voluntary ombudsman scheme says a lot about how seriously you take service, and the respect you have for your customers. It could be what makes a person decide to shop with you rather than another, seemingly less trustworthy provider.
  • Customers want an ombudsman scheme covering retail. Surveys have repeatedly shown people say they would use a retail watchdog if it existed, so the launch of the TRO had become something of an inevitability. There will be a big advertising push about the service during 2015, and, again, shops and e-tailers participating can advertise that fact as part of their marketing, giving themselves a boost from the interest in the new scheme.
  • New EU rules will make dispute resolution a requirement. This year the Alternative Dispute Resolution (ADR) directive will come into force from the European Commission, making attempts to resolve retail disputes outside of the courts a retailer’s responsibility. Firms signing up to the ombudsman scheme will automatically be compliant with these new rules.
  • It saves time, money – and bad publicity. Once an enterprise is a member of the watchdog scheme, persistent customer complaints can be handed to the TRO for resolution, saving time, and hassle. Disgruntled customers are also given the correct information about their rights from the outset, so shouldn’t pursue pointless claims. Consider, too, that people who see their grievance being handled properly are less likely to whip up a storm on social media, so you could save your business embarrassment, and reputational damage.

How much will it cost?

Another reason some SME bosses may give for not joining the scheme will be the expected cost. With all the other strains on a company, is this extra expense really necessary? But charges for membership vary depending on the size of the business, with smaller retail operators getting a very good deal.

  • Independent retailers with a single shop or website pay £100 a year for membership.
  • Business owners with fewer than five shop locations will be charged £200 per annum.
  • Annual membership for companies with between five and 100 stores is £500.
  • Bigger brands that operate at a large scale either online or on the high street pay between £1,000 and £2,600.

If small retailers still need persuading that becoming a member of the new ombudsman service is a good idea, then consider this – research shows that consumers are significantly more likely to tell people about a negative customer service experience than a positive one. Now, for a minimal cost you can show that you’re one of the good guys. Do all that you can to ensure any gripes and grumbles don’t escalate unnecessarily. Show yourself to be a responsible retailer, and sign up for the TRO scheme today. It’s one thing that could make your business’s January hangover a lot less painful.

Praseeda Nair

Praseeda Nair

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.

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