Consumer Duty Guidance: letter to Minister

To: Minister for Public Finance
cc/ Deputy First Minister and Cabinet Secretary for Economy and Gaelic
cc/ Cabinet Secretary for Finance and Local Government
cc/ Minister for Employment and Investment
cc/ Minister for Business

From: Professor Russel Griggs OBE
Chair, Regulatory Review Group

Dear Mr McKee,

I am writing as Chair of the Regulatory Review Group (RRG) to provide independent advice on the Consumer Duty (‘the Duty’) guidance, which aims to put consumer interests at the heart of strategic decision-making across the public sector and deliver better policy outcomes for consumers in Scotland through better quality public services.

This note provides an overview of the RRG’s role and details recommendations on cumulative impact assessment, consumer messaging and considerations for the compliance and enforcement regime.

Regulatory Review Group (RRG)

The independent RRG was re-established by the Scottish Government as part of the New Deal for Business to support Scottish Ministers in improving the regulatory environment for businesses and their involvement in that process. The RRG’s membership is detailed in the Annex. The RRG consider upcoming regulatory developments and as part of its work programme identified the Duty guidance as a scrutiny priority.

The RRG’s objectives are to:

1. Work constructively with the Scottish Government to ensure that policy officials and relevant Ministers are sighted on implementation challenges with regulations early in development.
2. Deliver purposeful and targeted written and verbal advice to the Scottish Government, drawing upon extensive expert insight from business and regulators across Scotland.
3. Support the delivery of the New Deal for Business by ensuring that the potential barriers to the success of Scottish Government policies are removed through an improved understanding of the practicalities of implementation.

The RRG’s remit is to examine and identify implementation challenges and appropriate mitigations of regulation. The RRG does not provide a view on the appropriateness of substantive policy or decisions to be taken on legislative priorities.

Consumer Duty

Along with RRG members, I met with your officials and Consumer Scotland representatives on Thursday 30 May 2024. Attendees provided an insightful presentation on the proposed guidance and gave detailed responses to our questions. The guidance has been drafted to support decision-makers within relevant public authorities in ensuring they are applying the duty in strategic decision-making, and it is in the spirit of supporting that endeavour that this advice is provided.

The following recommendations have been made by the RRG for consideration:

1. There will be a challenge in ensuring that the Duty is consistently applied, particularly in the absence of a proportionate enforcement regime. While the RRG welcomes placing a Duty on public bodies to consider the impact on consumers, the reality of how it operates in practice may be somewhat different. There are several duties that public bodies must comply with and there is a risk that this addition may be viewed as an administrative exercise and may be overlooked without an appropriate compliance and enforcement arrangement.
2. Robust early engagement with public bodies to set expectations will be critical to securing successful senior leadership involvement. The RRG welcomes the idea of having board champions to promote and drive public body compliance along with the creation of a network of champions to help apply the Duty. There is a risk in allowing public bodies to define what a strategic decision is and that it may lead to divergence in application.
3. Local flexibility may create disparity throughout Scotland through inconsistent application of the Duty. This may be an unintended consequence of the Duty and a national standard style would help to combat this. The RRG is aware of the implementation challenge this would create due to resource and budgetary constraints, which in turn only enables Local Authorities to provide a service level they can rather than the service level they are striving to.
4. There is no mechanism for consumer groups to ensure public bodies are held accountable for how the Duty is applied. It is essential for public bodies to be held accountable on application of the Duty if the long-term success is to be monitored and realised. The RRG recognises that resource constraints may affect the ability of public bodies to demonstrate and report on compliance but presents that there needs to be some sort of mechanism to sit alongside the guidance. The RRG suggests that the Scottish Government seek assistance from Audit Scotland to help with the monitoring of public bodies by checking there is reference to the Duty within annual reports and accounts. The long-term monitoring arrangements for this Duty should be explored further between Scottish Government and Consumer Scotland and confirmed within the guidance.
5. The Consumer Duty should be added into the BRIA as an additional consideration within the policy making process. Though the RRG is aware that Scottish Ministers now have a separate section to complete to confirm that they are content that officials have considered the impact on consumers in addition to the normal Ministerial approval, it would be beneficial and impactful for policy makers to have due regard throughout the policy development process.  

A copy of this letter will be published on the RRG’s webpage and has been sent to your Ministerial colleagues with an interest in this area. A copy of this letter will be sent to Consumer Scotland for their interests.

The RRG would be happy to discuss the above recommendations with you and would welcome an update on how the Scottish Government and Consumer Scotland intends to take forward proportionate compliance, monitoring and enforcement.

Consumer Duty Guidance: letter to Minister

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