The Scottish Government recently published Consumer Protection and Representation in an Independent Scotland: Options, setting out its vision for a new distinctively Scottish consumer protection, advocacy and redress regime, should Scotland vote for independence. The intention is to streamline and simplify the current complex and confusing consumer landscape, in order to better meet the needs of consumers in Scotland. The key proposals are:

• Establishing one unified consumer body to integrate consumer protection, advocacy, education, advice and enforcement for all of the regulated industries
• Streamlining the range of organisations which provide advice by setting up a ‘one-stop shop’ advice agency with a recognisable ‘brand’
• Establishing local community ‘hubs’ to provide consumer education and advice
• Creating a ‘one stop shop’ consumer ombudsman to deal with consumer complaints quickly
• Creating either a consumer agency which would include a competition authority and be closely aligned with a new economic regulator or three agencies – a consumer agency, a competition authority, and an economic regulator, all closely aligned with each other.

The current ‘consumer landscape’

As the report points out, the protection and representation of consumers is vital to ensuring a successful economy, preventing rogue traders and protecting the most vulnerable. There is little doubt, however, that the current UK framework of consumer protection, advocacy, education, advice and enforcement is complex and confusing. It is also currently in a state of flux as a result of UK government reforms. The Office of Fair Trading (OFT) is due to be abolished in April 2014, and many of its functions transferred to the new Competition and Markets Authority. Consumer Focus, the statutory consumer champion created in 2008, is also being abolished. Some of its functions have already been transferred to Citizens’ Advice and Citizens’ Advice Scotland. Now called Consumer Futures, it will continue to work on energy and postal services (and water in Scotland) until April 2014, when its remaining functions will be transferred to the Citizens Advice Service. There are also a variety of organisations providing consumer advice, including the Citizens’ Advice Consumer Service telephone and online advice service, citizens’ advice bureaux, the Money Advice Service and local authority money advice services.

The landscape in Scotland

The situation in Scotland is particularly complex due to the overlapping responsibilities of the UK and Scottish governments. Consumers throughout the UK are protected by the same consumer protection and competition laws, and the same regulatory arrangements for financial services, energy, telecoms and postal services. Yet the enforcement of consumer protection law is carried out by Scottish local authority trading standards services, the long term viability of which is under threat.[1]  The Scottish Government has no locus to develop national standards for trading standards services or to help local authorities to work together, which is not in the consumer interest.

There is also a division between responsibility for consumer protection and consumer education [2](2), information, advice and advocacy, which are reserved to Westminster, and responsibility for delivery of financial capability and inclusion and legal education and advice, which lie with the Scottish Government.

Consumers, public policy and consumer law

Most of the public policy issues which directly affect consumers in Scotland are actually already devolved. While consumer protection is reserved under the Scotland Act,[3] it is defined quite narrowly to include areas such as the sale and supply of goods and services; trade descriptions; consumer credit; and misleading and comparative advertising. While this fits with the traditional view of the consumer as the ‘shopper on the high street’, general understanding of the consumer interest has broadened over the years. This is largely due to the efforts of consumer organisations, which have long argued that we are all consumers, regardless of whether we access the goods and services we need through public or private markets. While some areas of policy affecting consumers, such as energy, financial services, telecommunications, postal services and aspects of transport, are reserved, many are devolved. These include legal services, the civil justice system, health, transport, food and diet, social care, education, housing, energy efficiency, water and digital inclusion

The report sets out the Scottish Government’s intention to consider legislation on a number of issues which are currently reserved, should there be an independent Scotland. These include introducing a cap on interest rates, introducing tougher regulation on pay day lending companies, regulating the parcel delivery market and regulation of nuisance calls. This raises a number of issues regarding how this might be done in practice, given, for example, that most markets operate on a UK basis (as much discussed in the debate about minimum alcohol pricing), and that much of the relevant legislation originates from the EU.

The Scottish Government’s proposed options

Having spent many years advocating the consumer interest in Scotland, I can see significant appeal in the notion of an entirely separate Scottish consumer landscape. I know how difficult it can be trying to ensure that the Scottish voice is heard in UK discussions on consumer policy and consumer law. It could also be very frustrating having to explain regularly to colleagues south of the border which areas of policy were devolved in Scotland and that while often the law might be the same, the institutional framework and legal system were very different. That, while consumer laws were largely the same, we had a very different small claims process with a lower financial limit; that we did not have a procedure for multi-party actions; that in Scotland, trading standards officers could not take criminal prosecutions directly to court, but were reliant on the procurator fiscal to do so - and so on.

The concept of a system which is specifically tailored to the needs of consumers in Scotland is also very attractive. Consumers in Scotland often face different issues to consumers elsewhere in the UK, particularly those living in remote, rural and island communities. Remoteness from urban centres often means consumers have fewer choices and may face higher prices- in terms of retailers, energy supply, transport and telecommunications, among others. The report highlights, for example, the disproportionately high parcel delivery charges affecting consumers in remote and island communities.

There are also differences in consumer attitudes between Scotland and the rest of the UK. Consumers in Scotland tend to be more loyal to particular goods and services, often choose Scottish service providers as a point of principle, and are less likely to switch providers in order to save money.[4]  There are also economic differences: consumers in Scotland are less likely to be in employment, less likely to have a high income, and more likely to be in receipt of welfare benefits.

Consumer advocacy

It makes sense to streamline the consumer advocacy bodies that currently exist, in order to create a strong and integrated body representing consumers’ interests across the economy. This process was started at UK level in 2008, by bringing together the National Consumer Council, energywatch and Postwatch to form Consumer Focus. The functions of Waterwatch Scotland were transferred to Consumer Focus Scotland in 2011. Following the transfer of Consumer Focus Scotland’s functions to Citizens’ Advice Scotland in April 2014, various other sectoral consumer bodies will remain, including the Financial Services Consumer Panel, Communications Consumer Panel, Passenger Focus, Bus Users Scotland and the Mobility Access Committee for Scotland. The report proposes a single body which will undertake consumer advocacy in all of the regulated industries covered by Consumer Futures, in addition to transport and financial services, and the work of the Communications Consumer Panel.

The potential strengths of establishing one single consumer body across all markets include ensuring a consistent, joined approach to the consumer interest in those markets, and using experience and evidence in one sector to support change in another. This was one of the strengths of Consumer Focus Scotland- bringing together significant knowledge of housing policy with expertise on energy issues resulted in a strong and influential approach to policy on energy efficiency in housing, for example. 

While the proposals are broadly to be welcomed, the report appears to consider consumers to be only those who buy goods and services through regulated private markets. What about consumers of public services?  Consumption is not necessarily about paying for a service, and it can be argued that there is even more need for consumer advocacy in relation to public services. We all need and use them, there is little choice of provider, and there are not the same external pressures which exist on providers in other markets. Consumer Focus Scotland, and the Scottish Consumer Council before it, did a huge amount of work on issues such as access to civil justice, parental involvement in education and patient involvement in the NHS. They achieved some real successes through this work - securing a user focus duty on public sector scrutiny bodies, for example, and playing a key role in the reviews of the civil and administrative justice systems.

Moreover, while the regulated markets outlined in the report are vital for consumers, there is no mention of various other policy areas which are also of major importance to consumers. Consumer Focus Scotland and the Scottish Consumer Council carried out significant consumer advocacy work on legal services, housing, food, debt and access to information, for example. Will the proposed new body also work on these issues?

The Scottish Consumer Authority

The report contains little detail about what form the proposed new ‘Scottish Consumer Authority’ would take. If the Scottish Government believes that consumer representation is vitally important, it should ensure that the new organisation has a statutory basis. This would give it legitimacy and security, were the external political or economic climate to change (although the experience of Consumer Focus demonstrates that this can never be guaranteed). Giving it clearly defined statutory functions would also ensure that it was accountable to both parliament and the public. It is also important that the new body should be independent and seen to be independent, to ensure public trust and confidence in it. It should have a strong research focus, helping it to ensure that consumers’ interests are correctly identified, giving it credibility with government, business and regulators, and ensuring that its policies are based on sound evidence. 

The report envisages that the new ‘Scottish Consumer Authority’ would have responsibility for advice, education and information, and enforcement, as well as consumer advocacy. Again, there is little detail as to how this might work in practice, and while a more integrated consumer body has initial attractions, detailed consideration would need to be given to whether and how it could perform all of these different roles effectively. In particular, the report is not clear as to how what enforcement role the authority might have, and how the role of trading standards services would fit with this.

Possible co-location with a new competition body

While the need to consider economies of scale in a country the size of Scotland is understandable, the report does not advance any compelling arguments for establishing a combined consumer and competition authority. It points out that Denmark and Finland have set up such combined bodies, but concedes that these are more along the lines of the OFT model. While the OFT has both a consumer and a competition role, its consumer role is about protecting consumers, rather than advocating on their behalf. The report cites the example of Ireland, which is about to merge its national consumer advocacy and enforcement agency with its competition authority, but this has not yet happened, so there is no evidence as to how successful or otherwise this will be. There must be concerns that if there were to be a combined consumer and competition authority, the consumer work could be overshadowed by the competition issues. This would also be a threat to the independence of the consumer body, which would be important to ensure public confidence.

Consumer advice

It is difficult to disagree with the intention behind the proposed local hubs for advice, together with a recognisable brand, and a one-stop shop for advice. Consumers must have access to appropriate, good quality, accessible advice when they need it. The difficulty will be working out how to achieve this in practice - we have been here before, over a decade ago, when the former Scottish Executive developed plans for ‘community legal services’, which never really got off the ground. Things have moved on, however, and while there will always be some people who will prefer face to face advice, the future of consumer advice lies largely in online services, which people can access where and when it is convenient. There is a need for a web-based system which brings together information, sources of self-help and advice and dispute resolution options, which would guide people through the dispute resolution process, as recommended by the Civil Justice Advisory Group chaired by Lord Coulsfield.[5]

Consumer redress

A quick, cheap, informal and easily accessible redress mechanism is a vital aspect of a good consumer protection system. The courts, even the supposedly informal small claims procedure, do not provide such a mechanism at present. In any case, we know that most people just want their dispute to be resolved quickly, so that they can get on with their lives, rather than necessarily getting everything they are legally entitled to.[6]  While there are a variety of dispute resolution schemes in existence, these are complex, fragmented and not always well known to consumers.  The report sets out a list of 95 sectoral ADR schemes identified by the OFT, although some of these- such as the Property Ombudsman –do not have a role in Scotland.

While it is difficult to argue against the principle of a Scottish ‘one stop shop consumer ombudsman’, there are likely to be many difficulties with this in practice. Firstly, many of the schemes run by trade associations are currently UK wide. Secondly, there may be situations where a national UK scheme would be more effective. Thirdly, it is difficult to see how one redress scheme could deal with such a wide spectrum of issues, or how it could have the specialist knowledge to deal with all types of consumer complaints. This would particularly be the case in relation to bodies dealing with professional services, such as the Scottish Legal Complaints Commission or Institute of Chartered Accountants in Scotland.

There are also questions about who would pay for such a scheme. Redress schemes are usually paid for by industry and are provided either free or low cost to the consumer. How would this work in Scottish context, where a market is UK wide?

Finally, there is a question as to where the proposed ombudsman would fit in with the ongoing reforms to the civil justice system. At present, the Scottish Government is focusing on court reforms, but there is a need to consider courts as part of a wider system of dispute resolution, with an emphasis on ADR at an early stage.

Conclusion

The report sets out an ambitious set of proposals. While there is much to be welcomed, there is little detail about how the proposed system would work in practice, raising many questions to be answered. Ultimately of course, it is all dependent on the outcome of next September’s referendum, but in the event of a ‘yes’ vote, a lot more work will need to be done before the Scottish Government’s vision can be realised in practice.

Sarah O’Neill is an independent consumer and legal policy consultant. She was formerly Director of Policy and solicitor at Consumer Focus Scotland.