The Consumer Scotland Bill aims to establish a new body - Consumer Scotland - with responsibility for co-ordinating advice and advocacy work on consumer issues in Scotland.
This briefing discusses the provisions of the Consumer Scotland Bill as well as the landscape in which the body created by the Bill - Consumer Scotland - would operate.
Consumer Scotland would have responsibility for co-ordinating consumer advice and advocacy work in Scotland. These powers were devolved to the Scottish Parliament in the Scotland Act 2016.
However, most consumer powers, including legislating for consumer rights and consumer enforcement, remain reserved to Westminster. This would limit Consumer Scotland's powers to compel people or organisations to act, but not its power to influence.
The Bill's provisions would establish Consumer Scotland as a body which:
must specifically consider the needs of vulnerable consumers;
has powers to require certain bodies to provide information.
The Bill would also create a consumer duty - this is a requirement for certain public bodies to consider the impact of their decisions on consumers.
Various public and private sector organisations already work on consumer issues. It is likely that the Bill's provisions will have a particular impact on the work of the Citizens Advice and trading standards services.
The Consumer Scotland Bill was introduced in the Scottish Parliament on 5 June 2019 by Derek Mackay MSP, Cabinet Secretary for Finance, Economy and Fair Work. It is a Scottish Government Bill.
All documents relating to the Bill can be found on the Consumer Scotland Bill page of the Scottish Parliament's website. These include:
the Policy Memorandum2;
the Financial Memorandum3; and
the Explanatory Notes4.
The Economy, Energy and Fair Work Committee is the lead committee for bill scrutiny. It has issued a call for views, which closed on 11 September 2019.
The Bill is the Scottish Government's response to powers for consumer advice and advocacy, devolved in the Scotland Act 2016. This section will look at:
the nature of the consumer powers devolved to the Scottish Parliament; and
the interplay between these powers and other consumer competencies, which remain reserved to the UK Parliament.
The Scottish Parliament can legislate for the delivery of consumer advice and advocacy
Section 50 of the Scotland Act 2016 devolves to the Scottish Parliament the power to legislate for the delivery of consumer advice and advocacy. The services can be delivered by a public body, or commissioned by one.
Section 50 of the 2016 Act also deals with a levy paid by energy and postal operators. This levy is used to fund consumer support services in these areas. Energy and post businesses can be required to contribute - to the extent the Secretary of State thinks reasonable - to consumer advocacy and advice services provided under devolved powers in Scotland.
These powers came from a recommendation by the Smith Commission
The Smith Commission was set up after the 2014 Scottish independence referendum. It was made up of members from the five political parties represented in the Scottish Parliament.
Its job was to make recommendations for further powers which should be devolved to the Scottish Parliament. This followed a promise from UK politicians that, if independence was rejected, devolution would be strengthened.
The Scotland Act 2016 also devolved some competition powers to the Scottish Government
Section 63 of the 2016 Act enables Scottish Ministers to make a joint reference with UK Ministers to the Competition and Markets Authority (CMA) to require it to carry out an in-depth investigation of a specific market.
This power would be used if there was concern that competition was not operating effectively in that market. UK Ministers must agree to make the reference.
This power is not directly relevant to the Consumer Scotland Bill. However, it is likely that evidence gathered by Consumer Scotland would be used to inform a decision by Scottish Ministers to request a market investigation, if appropriate.
SPICe has produced two separate briefings looking at the nature of the new consumer power.
Most consumer powers remain reserved to Westminster
This division of powers is likely to significantly constrain the options available to Consumer Scotland to require change. However, it would not stop the body influencing and persuading.
Reserved consumer powers include:
the power to legislate for consumer rights;
the power to legislate for product safety (except in relation to food);
the power to legislate for enforcement, via regulation or by enhancing the powers available to enforcement officers, such as trading standards officers;
control over most regulated markets, including financial services, energy, transport post and communications; and
the power to regulate anti-competitive behaviour.
The Scottish Parliament's powers include:
newly devolved competence in relation to consumer advice and advocacy;
control over local government finance, so that services such as trading standards could be enhanced;
control over some regulated markets in Scotland, including water;
the power to regulate devolved subjects, with legal services and housing being examples of areas where there is a clear consumer interest; and
the power to legislate for court structures, for example, user-friendly court processes.
The European Union (EU) also has relevant powers in this area. It shares competence for consumer protection with member states, allowing it to bring forward measures to ensure a baseline standard of protection across the EU. It also has significant responsibilities in relation to product safety and competition.
The Competition and Markets Authority (CMA) has responsibility for promoting competition for the benefit of consumers in the UK
This includes putting measures in place where markets are not working for consumers. The CMA also has responsibility for protecting consumers from unfair trading practices. It takes a strategic, UK-wide approach.
Various markets in the UK are regulated by legislation. This is because there is a high risk of consumer harm if operators are left to their own devices. Regulated sectors include financial services (regulated by the Financial Conduct Authority), energy supply (regulated by Ofgem), communications and postal services (regulated by Ofcom), rail and air transport.
Sector regulators work with the CMA and co-ordinate their activities through the UK Competition Network.
Trading standards officers enforce consumer protection standards in relation to traders
Trading standards officers work for local authorities. Trading Standards Scotland co-ordinates activities between local authorities and at a national level, including intelligence gathering.
Trading standards services may offer advice to businesses about complying with the law. However, most do not provide advice to consumers. Some services do provide support to customers who have tried to resolve their problem but have experienced difficulties with the business concerned.
The Citizens Advice service provides frontline advice through its network of Citizens Advice Bureaux and telephone and web services
Bureaux are independent charities which are mainly funded by local authorities.
Citizens Advice Scotland co-ordinates CAB activities and campaigns on consumer issues. It provides specific statutory support to energy, post and water customers. It also took over some consumer advice, advocacy and education responsibilities previously provided by government.
Other organisations, including Which?, Energy Action Scotland and Shelter Scotland, also provide consumer advice and advocacy.
The Scottish Government has recently launched the consumeradvice.scot service as a source of telephone and online advice. It is provided by Advice Direct Scotland.
The Scottish Government set up a working group in 2015 to advise on how best to deliver the Scottish Government's consumer and competition agenda. The group carried out its work before any powers were formally devolved. However, it was aware of the scope of the legislation making its passage through the UK Parliament at the time.
The working group focussed on what it described as the four pillars of consumer protection. These are:
advocacy - highlighting the needs of consumers to businesses, government and other public bodies so that policy can be refined;
advice - supporting consumers to understand and enforce their rights - also, in the eyes of the Working Group, covering information and eduction;
enforcement - government-sponsored action to require organisations to recognise consumer rights; and
redress - options for consumers to remedy breaches of their rights, through courts and other formal legal forums, or via alternative dispute resolution, such as mediation.
The working group made the following recommendations in its final report1:
that the Scottish Government creates a new consumer body called Consumer Scotland, which is independent and accountable to the Scottish Parliament;
that Consumer Scotland has wide ranging powers to represent the interests of consumers in both regulated and unregulated markets, and on issues (such as the poverty premium) which cut across markets;
that Consumer Scotland has the powers necessary to collect and share information between consumer agencies, and to conduct research and analysis;
that Consumer Scotland takes a high level approach to consumer advocacy, working with other stakeholders to plug gaps and make the best use of resources;
that Consumer Scotland works with other consumer advice providers towards a single portal for consumer advice, to increase access and ensure high-quality, consistent provision across Scotland;
that Consumer Scotland is responsible for setting national consumer enforcement priorities and for co-ordinating improvements to trading standards services;
that Consumer Scotland works with consumer redress providers to improve access to alternative dispute resolution (ADR) and create common procedures for eg. information sharing;
that Consumer Scotland has sufficient expertise to engage with relevant parties on competition issues.
The Scottish Government responded2 to the working group's report in 2016. It particularly emphasised the need for information sharing between stakeholders, the need for technical expertise and the need to work with regulators to embed consumer-focussed practices. It also noted that some aspects of policy activity, particularly enforcement powers and aspects of consumer ADR, remained reserved.
The Scottish Government has established a Consumers and Markets Taskforce to provide oversight of its delivery of consumer and competition policy. It is made up of representatives from the public, private and third sectors.
The taskforce provides a forum to evaluate problems and disseminate best practice. It is also responsible for prioritising issues to be addressed. This is done according to agreed criteria. These include having an evidence-base, being Scotland-focussed, adding to work that is being carried out by other agencies and having a measurable impact.
The Scottish Government has noted that the Taskforce also acts as a sounding board for plans for Consumer Scotland's development and integration into the existing consumer landscape1.
In 2016, the Scottish Government published its initial thoughts on how it would use its new competition and consumer powers. The document is called Delivering better outcomes for consumers and businesses in Scotland1.
It lists the principles which will guide Scottish Government work in this area. At a high level, these are (see pages 4 to 5):
Consumer protection and competition policy will support economic growth while upholding our values of a fairer, more equal Scotland.
Collaboration and flexibility will be at the heart of our approach.
Consumers will be protected from harm, and empowered to challenge organisations to take their needs into account.
Protecting consumers will also protect and support businesses, and encourage fair competition.
Scotland's competition policy should reflect its specific needs and circumstances.
The document also sets out how the Scottish Government will measure the impact of its work. The factors to be used are (see page 10):
Scotland's consumers can access the right advice at the right time in a way that works for them;
ensuring that the advice given to consumers has a positive impact on their lives. In particular, that it helps people in our communities deal with the worst effects of poverty;
ensuring that consumer advocacy is influencing the decision-making processes of policy makers and regulators;
Scotland has effective and open markets that provide consumer choice and allow businesses to operate on a level playing field; and
Scottish businesses are innovative, efficient and fair, boosting consumer trust and supporting inclusive economic growth.
The Scottish Government consulted1 on proposals for Consumer Scotland in 2018. The consultation also covered changes to the wider consumer landscape and the creation of a consumer duty for certain devolved public bodies. A total of 58 responses were received from a range of stakeholders.
An analysis of the responses to the consultation2 (2018) is available, but there is no published Scottish Government response.
The Bill would establish a new statutory body called Consumer Scotland, accountable to the Scottish Parliament.
According to the Policy Memorandum (paragraph 26):
"It will establish a public body called Consumer Scotland with the primary objective of providing consumer advocacy and advice. The Bill will enable Consumer Scotland to take a strategic and evidence-led approach to identifying how and why consumers experience harm in Scotland and proposing solutions to mitigate it. In so doing, the body should increase consumer fairness across Scotland. "
The Policy Memorandum (paragraph 19) also identifies four key functions for the organisation. These, it is argued, would enable Consumer Scotland to fulfil its goal of developing and advocating for practical solutions. The functions are:
providing strategic oversight of the consumer landscape to ensure resources are targetted effectively to tackle harm;
conducting in-depth investigations into areas where harm in Scotland is most acute and recommending solutions;
facilitating access to a consumer advice system which meets consumer needs and collects data to support prevention work;
commenting on Scottish Government policy which impacts on consumers and supporting public authorities to comply with a statutory consumer duty.
This part of the briefing will look at:
The Bill deals with the membership of Consumer Scotland, as well as requirements to publish regular reports and reviews.
Section 1 of the Bill establishes a body to be known as Consumer Scotland
Consumer Scotland would have a chair and two to four members appointed by Scottish Ministers. The posts can be paid.
It would also have a chief executive, approved by Scottish Ministers, and staff. The Financial Memorandum1 (paragraph 19) assumes there will be between 19 and 25 staff. The ongoing running costs are assumed to be between £2 million and £2.6 million per year.
It would be able to establish committees and sub-committees. Non-members would be able to participate in these forums but would not be able to vote.
Sections 13 to 18 of the Bill give more information about the accountability framework for Consumer Scotland
Consumer Scotland would be required to prepare a forward work programme each year, in consultation with relevant stakeholders. The document must be laid before the Scottish Parliament.
The forward work programme must cover the priorities for Consumer Scotland over the following year and a description of the main activities planned.
It must also publish an annual report at the end of each year, which would be laid before the Scottish Parliament.
After any investigations, Consumer Scotland would be required to send a report to Scottish Ministers, covering its findings and any recommendations.
Consumer Scotland would also be required to publish a consumer welfare report every three years, to be laid before the Scottish Parliament. This would cover how well consumer interests are being served in Scotland and the extent of any harm to consumer interests.
Consumer Scotland would also be subject to five-year reviews
The Bill makes provision for Consumer Scotland to be subject to review by an independent person, after three years initially and every five years thereafter. The purpose of the review is to report on Consumer Scotland's performance in relation to its functions.
Consultation
The Scottish Government's Consumer Scotland consultation2 did not consult in detail on its structures or accountability mechanisms. However, there was broad support for a body which was independent of government. Some consultees stressed the need for adequate resourcing.
Consumer Scotland's main purpose is to provide consumer advocacy and advice
In doing so, it has three over-arching aims. These are (section 2):
reducing harm to consumers;
increasing confidence among consumers in Scotland in dealing with businesses; and
increasing the extent that consumer matters are taken into account by public authorities in Scotland.
To carry out its purpose, Consumer Scotland has a range of functions
These include:
giving advice to any person or body on consumer policy matters;
collecting information about consumer matters and investigating practices which may cause consumer harm;
providing - or securing the provision of - advice and information to consumers.
Consumer Scotland is under a duty to exercise its functions in a collaborative way
Section 6(3) of the Bill states that:
Consumer Scotland must have regard to-
a) the activities carried on by any other public bodies with the same functions as, or similar functions to, Consumer Scotland, and
b) the desirability of working in collaboration with others where appropriate.
According to the Policy Memorandum (paragraph 34), this will allow Consumer Scotland to work in co-operation with other bodies, rather than duplicating existing effort.
Note though, that Consumer Scotland would only be required to consider the activities of other public bodies. The requirement does not extend to third sector organisations working on consumer issues, like Which? or Citizens Advice Scotland.
Consultation
There was general support for the proposed functions of Consumer Scotland in the Scottish Government consultation1.
There were also calls for clarity about the role of Consumer Scotland in relation to other bodies which deal with consumer issues. There were concerns that, without this, there may be duplication of effort, especially in relation to the work of the Citizens Advice Service.
A number of respondents suggested additional powers and duties for Consumer Scotland. These included:
assessing whether redress mechanisms for consumers were working effectively;
taking an overview of trading standards services or monitoring the performance of trading standards services;
carrying out enforcement or prevention work, or both;
investigating markets which are not working effectively for consumers in areas of devolved responsibility; and
being able to lay reports directly before the Scottish Parliament, including recommendations about legislative actions.
Section 6(4) of the Bill would require Consumer Scotland to have regard to the interests of vulnerable consumers
The definition of vulnerable consumers includes:
people who are sick or disabled;
older people;
people with low incomes; and
people who have fewer consumer options because of where they live - including those who live in remote rural and island communities.
According to paragraph 50 of the Policy Memorandum, this duty was added as a result of responses to the Scottish Government consultation1.
The Policy Memorandum (paragraph 36) emphasises that stakeholders are expected to share information with Consumer Scotland on a voluntary basis. However, Consumer Scotland would have the power to compel certain bodies to provide information if necessary.
Sections 8 to 12 of the Bill set out Consumer Scotland's powers to require information
Consumer Scotland would be able to issue certain people or bodies with a notice requiring them to provide specified information. This would apply to:
a "designated regulator";
a "regulated provider";
anyone supplying goods or services in the course of a business; and
any other person specified by Scottish Ministers.
Scottish Ministers would use secondary legislation to specify which people or bodies come under each category.
There are different processes to enforce compliance with a notice, depending on who has been targetted
For designated regulators, Consumer Scotland can require the regulator to provide a written statement explaining their non-compliance, which can be published.
For regulated providers, Consumer Scotland can - where appropriate - refer the matter to their designated regulator. The designated regulator will then investigate the matter and decide whether to direct the provider to comply.
In other cases, Consumer Scotland can apply to Scotland's senior court, the Court of Session to enforce compliance. The court can order the person or body to comply with the notice.
No person or body would be compelled to provide information which is covered by legal professional privilege. That covers discussions with a lawyer, or documents prepared to support court action. Scottish Ministers would be able to use secondary legislation to create further situations where people would not have to comply with an information notice.
Consultation
The importance of gathering and sharing information was emphasised throughout the Scottish Government's consultation1. However, it did not consider in any detail what information-gathering powers Consumer Scotland should have.
Information sharing in other contexts
Note that a number of bodies which Consumer Scotland is likely to want to share information with - such as trading standards, Citizens Advice Scotland and other advice providers - are not covered by these provisions. Sharing information in these contexts will be governed by data protection legislation and organisations' own protocols.
It is not clear what this will mean in practice. However, the Scottish Government is in the process of establishing a Consumer Scotland data group, which will bring together representatives of these organisations to discuss how data can be shared2.
The Bill would create a duty on relevant public authorities to consider consumer interests when making decisions of a strategic nature.
Specifically, public authorities would be required to have regard to:
the impact of those decisions on consumers in Scotland, and
the desirability of reducing harm to consumers in Scotland.
Neither the nature of the duty nor the processes around it are specified in any detail in the Bill. It is intended that these will be fleshed out in the future.
Scottish Ministers would be empowered to use secondary legislation to designate relevant public authorities (in consultation with those bodies and other stakeholders). Consumer Scotland would be able to issue guidance about the duty.
Relevant public bodies would be required to report on how they have complied with the duty at least every year.
The Policy Memorandum outlines the Scottish Government's thinking in creating a consumer duty. It acknowledges the important role consumers play in driving the economy, changing behaviours (such as tackling unhealthy eating or poor environmental practices) and holding businesses to account. By ensuring that consumer interests are considered at an early stage of policy development, the Scottish Government hopes to improve policy outcomes well beyond traditional consumer matters.
However, the Scottish Government also explicitly accepts (paragraph 41) that there will be situations where other interests - such as environmental concerns - will outweigh consumer interests.
Consultation
There was support for the creation of a consumer duty from those who responded to the Scottish Government consultation1. However, the consultation did not look in any great detail at how this could be implemented.
Some respondents highlighted the need for support and guidance for public bodies to implement the duty. Others noted a risk that it could clash with other local government priorities, such as best value.
Citizens Advice Scotland stands to lose functions as a result of the creation of Consumer Scotland
Advocacy
The Working Group on Consumer and Competition Issues recommended that some specialist advocacy services currently provided by Citizens Advice Scotland were moved to Consumer Scotland. Note that the Citizens Advice Scotland representative on the Working Group dissented to this.
This proposal was highlighted in the Scottish Government's Consumer Scotland consultation1 (see page 6). However, it was not an issue covered in the analysis of responses2. Some respondents did highlight the valuable work carried out by the Citizens Advice service, as well as the need to avoid duplication.
The services in question were previously provided by Consumer Futures Scotland but were moved to the Citizens Advice service by the UK Government in 2014. They cover advocacy in relation to post and energy markets as well as in a range of other areas.
At the time of writing, it appears that the Scottish Government intends to moving funding for these services from Citizens Advice Scotland to Consumer Scotland.
Advice
The Scottish Government has recently launched a new consumer advice service - consumeradvice.scot - providing online and telephone consumer advice. It is being delivered by Advice Direct Scotland, a charity formerly affiliated with the Citizens Advice service.
The Working Group on Consumer and Competition Issues recommended that the Scottish Government worked towards a single portal for users to access advice on consumer issues. However, it is not clear what the current initiative means for the advice services offered by the Citizens Advice service.
It appears that Consumer Scotland will not have a co-ordinating role in relation to trading standards services
Several reports by the National Audit Commission3 and Audit Scotland4 have highlighted ongoing problems with the work of trading standards. The underlying themes are that:
trading standards services have seen large and disproportionate cuts as a result of local government funding constraints, meaning some services lack the resources to operate effectively;
an increasing amount of consumer harm occurs through cross-local authority border and national activities, creating a need for better co-ordination;
there is a need for co-ordinated intelligence-gathering to allow issues to be prioritised.
The Working Group on Consumer and Competition Issues saw a role for Consumer Scotland in addressing these issues. It recommended that Consumer Scotland took on the work of co-ordinating trading standards priorities in Scotland and of dealing with problems with service delivery.
There were also calls in responses to the Scottish Government's Consumer Scotland consultation for Consumer Scotland to have these powers2. However, some respondents also noted that powers to legislate in relation to enforcement remain reserved to the UK Parliament.
The Policy Memorandum makes no mention of a role for Consumer Scotland in prioritising trading standard's cross-border work or supporting service improvement. However, the Scottish Government is keen for Consumer Scotland to have input into these areas at an operational level6.