In 2015 we established the independent Working Group on Consumer and Competition Policy in Scotland to advise how the Scottish Government could best use devolved consumer powers. Broadly summarised, its main findings were that the current landscape does not have a central, galvanising point to develop a clear, objective picture of the harm consumers experience in Scotland, and consequently, to target resources where help is most needed. For the same reason, while there is much good practice, there is not yet a mechanism to analyse the wide array of data on consumer harm to fully understand its causes. Finally, the Working Group noted that there is not a dedicated organisation whose sole focus is to spearhead the actions needed to redress consumer issues even where their impact and causes are understood.
In its report  , the Working Group recommended establishing a public consumer body, which would take on the statutory functions currently held by CAS to deliver consumer advocacy and represent the consumer voice. It would also take responsibility for ensuring consumers have access to advice and redress services; for promoting competitive markets; and for championing models of regulation that focus more on consumers.
Since the Working Group reported, the complexity of challenges consumers face has, if anything, increased. From the uncertainties inherent in Brexit, to the disruption and urgent questions of data protection and privacy posed by rapid advances in technology, consumers face more difficult choices and a wider array of information than ever. There are also still many challenges facing consumers in complex markets, such as energy and telecoms and, in Scotland, these can be exacerbated by specific issues, such as a greater proportion of citizens living in rural areas, that require a more targeted intervention.
Nonetheless, we recognise that we must be certain that creating a body takes into account the existing landscape and has real capacity to deliver meaningful change for consumers. The scope of our powers will make it difficult for us to compel change in reserved areas or markets, and there is a network of strong consumer protection organisations, from national regulators to local trading standards services and advice providers, that already work hard to ensure consumer interests are safeguarded.
Since the Working Group’s report, we have explored how we can best recognise this work and add value. We have concluded that addressing consumer challenges in Scotland requires developing a mechanism to:
- synthesise the abundance of evidence and data of consumer harm produced by the wide range of consumer-focused organisations;
- identify the most serious or pressing issues leading to consumer detriment; and
- develop and champion evidence-based solutions to tackle those issues.
We propose establishing Consumer Scotland to take on this role.
Consumer Scotland in practice
Consumer Scotland will be an investigatory body, focused on tackling issues where there is a high level of consumer detriment, and which will require concerted and often collaborative action to address. Unlike a traditional consumer advocacy organisation, it will focus on proposing specific solutions rather than highlighting the existence of harm. These solutions will be developed after robust and forensic analysis of the extent of the harm to consumers, its underlying causes, and the impacts of potential interventions.
It will conduct only a small number of in-depth inquiries at any given time to ensure that each receives thorough and expert consideration. Following investigation, the body will, where appropriate, make recommendations for action on behalf of consumers. Because the reasons for consumer harm are often multifaceted, the recommendations will cover government, regulators, enforcement agencies, and industry.
First and foremost, the body must be established with the right infrastructure and tools to allow it to perform this role well. In particular, we propose that Consumer Scotland will:
- Be an independent body, established by statute and at arms-length from the Scottish Government. It will be vital that it has the credibility to challenge our own policies and to direct its investigations where the evidence leads.
- Be staffed by experts. Its credibility will depend on the strength of its evidence and arguments, and we will ensure that, particularly in complex regulated markets, it is staffed by those who know the issues best.
- Be user-focused. Often, policies are designed for consumers. Building on the experiences of initiatives like the Customer Forum in water, which brings the consumer voice into regulatory processes as complex as setting prices, we will ensure that consumer panels are integrated into the investigation process.
- Have the capacity to drive change. It will be underpinned by statutory powers to gather evidence, and for its recommendations in devolved areas to be taken account of.
In addition to the right tools and resources, the right focus will also be essential. Consumer Scotland’s impact will hinge on its ability to launch investigations where its input is most needed. It must therefore:
- Be selective. Its value will result from its in-depth examination of intractable or complex issues that cause serious harm – the body must use set criteria to evaluate which projects merit further investigation, for example, based on the number of consumers harmed or the impact of on-going work from other organisations.
- Be Scotland focused. To avoid duplicating the work of UK organisations, Consumer Scotland will only take on an investigation where there is specific evidence of harm to consumers in Scotland – perhaps because the area is devolved, because the scale of harm is markedly more severe in reserved markets, or because there are specific cultural or geographic conditions that require a different regional response.
- Be transparent. The body must develop a robust and collaborative process for evaluating consumer harm and taking investigations forward.
While we will not constrain the body before its establishment by setting out in detail how it will evaluate evidence and choose projects for investigation, we will use the intervening time to ensure that we have created the conditions to support its role. In particular, the Ministerial Taskforce’s work on a consumer scoreboard will act as a forerunner to the process of gathering and assessing consumer harm across Scotland.
The following illustrate the potential scope of issues that could be considered:
- Legal services – a key strand of work of the recent review into legal services was to undertake specific research into the extent of the unregulated legal services market in Scotland and investigate any impacts on consumers, as well as developing a better understanding of the structure of the legal services market. Had Consumer Scotland existed, this could have been an area ripe for an in-depth investigation.
- Parcel deliveries – there is longstanding detriment suffered by consumers in rural or highland areas, who sometimes pay up to 50% more for delivery charges than consumers across the UK. While the Scottish Government has led action to tackle this, such as developing a statement of principles for use by retailers, the problem persists. A consumer body dedicated solely to Scottish issues could fully explore the underlying causes and propose practical solutions for reducing consumer detriment to businesses and regulatory authorities.
- Explorations of the effectiveness of the wider consumer protection system in Scotland – effective consumer protection depends on strong links between agencies across the landscape, for example between those which provide advice for individuals and those which enforce consumer law. Stakeholders agree that these links are not as strong as they could be, and that there are different levels and standards of services across the country. A consumer body could help to set a strategic direction, for example by developing guidance on what adequate enforcement and advice services entail, or to use its evidence of consumer harm in Scotland to help trading standards services balance competing enforcement priorities
Where reserved issues are involved, in keeping with devolved powers, Consumer Scotland will advocate only for solutions that are directly linked to addressing consumer harm. The credibility of the body and the strength of its evidence-led approach should ensure that its findings are taken into account. In devolved markets, we will explore how statutory powers can ensure that Consumer Scotland’s recommendations are taken into account by those they target. In reserved areas, Consumer Scotland would be able to alert Scottish Ministers where they have found sufficient evidence of a market failure. Ministers will have the option of using that analysis to support any request they decide to make, along with the Secretary of State, for the Competition and Markets Authority to carry out a second stage market investigation.
Collaboration and complementarity
The strength of the body’s relationships will underpin its success, especially where consumer issues arise in areas that the Scottish Government does not have powers to act. In both reserved and devolved markets, we will build strong links with regulators, enforcement agencies and redress providers – where possible within competence, we will supplement these with formal arrangements, and where not, through informal arrangements such as memoranda of understanding. This will create a strong network of linked activities:
- evidence from other consumer organisations, such as Trading Standards Services, will feed into Consumer Scotland’s wider analysis of consumer harm in Scotland as well as to the specific inquiries it takes forward;
- where Consumer Scotland does not take an issue forward for investigation that still requires remedial action, these organisations will still be able to campaign on them as they deem appropriate;
- organisations with specific expertise, such as regulators and the CMA, will be consulted while developing and conducting the pipeline of investigations, and, where appropriate, invited to contribute to inquiries, thus reducing duplication and ensuring the correct expertise are employed; and
- Consumer Scotland’s work to assess and understand the whole picture of consumer harm will ensure it is well-placed to alert organisations to emerging trends of detriment.
These linked functions will be particularly important to ensure Consumer Scotland and Citizens Advice Scotland work well together. While we propose that Consumer Scotland is established with statutory powers to investigate and gather evidence, we propose that CAS will also maintain its advocacy powers, allowing it to continue to use its unparalleled client evidence base to highlight consumer concerns to governments and regulators. This will ensure that creating a public consumer body does not have the unintended consequence of diminishing the consumer voice.
Their roles will be distinct but complementary. CAS will continue to advise individual consumers, and by aggregating this evidence, to highlight trends of consumer disadvantage, and to alert Consumer Scotland where this disadvantage is tipping over into consumer harm. CAS will also bring its evidence base to input into a range of ad hoc consumer activity, such as working groups and regulatory and policy consultations. Ahead of Consumer Scotland’s launch, we will work closely with CAS to understand and improve the impacts of its consumer advocacy and to ensure that both its role and Consumer Scotland’s are clearly demarcated.
We recognise that even a dedicated public body will struggle to truly represent consumer outcomes and that this will be impossible if we do not get its design, relationships and remit right. This design must include making sure it has the potential to adapt to changing needs and circumstances. We therefore urge you to help us shape these so that we collectively build a body that can have measurable and positive impact for consumers now and in the future.
2. Do you agree with the proposed functions of Consumer Scotland?
3. Which powers and duties would you like Consumer Scotland to have, in order to carry out its proposed role?
4. What are the criteria that would constitute a specifically Scottish consumer issue?
5. Which criteria might Consumer Scotland consider when assessing the level of harm needed to be reached before an investigation is pursued?
6. Are there additional functions you think Consumer Scotland should have to allow it to deliver impacts for consumers in the current landscape?
7. Are there any additional functions Consumer Scotland should have that will enable it to adapt and respond to future consumer challenges?
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