Report of the Working Group on consumer and competition policy

Executive Summary

"Consumers by definition, include us all, 'They are the largest economic group, affecting and affected by almost every public and private economic decision. Yet they are the only important group... whose views are often not heard." John F Kennedy

Consumer protection and representation are important because they allow a free market to operate effectively, ensure the vulnerable are protected, guard against unscrupulous traders and put consumers, businesses and local communities at the heart of regulatory decisions. Economic activity flourishes when consumers can trust businesses, so consumer trust is necessary to ensure a flourishing economy. Good consumer protection systems also protect businesses from rogue trading practices.

The Smith Commission recommended that consumer advice and advocacy powers be devolved to the Scottish Parliament, as well as the ability for Scottish Ministers to act with the Secretary of State to request the Competition Markets Authority to carry out a second stage market investigation. Scottish Minister's established a short-term Working Group with a specific remit of providing recommendations on how these powers could be put to best effect and what improvements could be made to the consumer protection and competition landscape in Scotland. The Working Group structured its discussions around the four pillars of consumer protection - advocacy, advice (including education and information), enforcement and redress - and competition. This report is a distillation of the discussions held by our five expert panels and the Working Group itself, and sets out recommendations to the Scottish Government.

The primary recommendation made by the Working Group is that the Scottish Government should create a statutory, unified consumer body. The Working Group made an early decision to name it Consumer Scotland. At its heart should be a synoptic approach to consumer and competition policy allowing cross-cutting policy engagement, ensuring that the voice of the consumer is heard at local, national (Scotland and UK) and European levels. In order to build credibility and gain the respect of governments, regulators, stakeholders and consumers, the new body must have the ability and the powers to undertake research, analysis and representation on a wide range of issues in markets and public services that affect both current and future consumers, some of which will require in-depth knowledge and technical expertise. It should also be able to respond as required to events that have immediate consumer impacts.

The poverty premium faced by some consumers is not restricted to one market. Remedies often require multi-utility, multi-agency approaches, across a range of regulators, local and central governments. Consumer Scotland should be sufficiently resourced and evidence-led to ensure that consumers' voices are heard, taken into account, and that proportionate changes can be taken forward. The Working Group is clear that Consumer Scotland should develop a consumer strategy that empowers and informs as well as protects consumers. To support this, the Working Group feels that Consumer Scotland should develop a coherent consumer strategy that recognises and supports the links between all four pillars, and simplifies the landscape to make it easy for consumers of all demographics to access help when they need it. The Working Group also wishes to emphasise that the Scottish Government should make full use of the devolved competition powers and develop policy accordingly.

The Working Group recommends that the Scottish Government should determine what new legislation and powers will be required for Consumer Scotland to gather and share robust information across the four pillars from a range of sources. This will allow Consumer Scotland to detect and prevent harm, and support businesses, public services, regulators and governments in continuous improvement.

When creating Consumer Scotland, the Scottish Government should set out clear lines of accountability to the Scottish Parliament, and consider whether there may be merit in creating a dedicated Consumer Minister. The Working Group feels strongly that Consumer Scotland should be a public body that is free from undue political or commercial influence. Consumer Scotland will need governance and oversight arrangements that demonstrate that it is independent and seen to be independent. To ensure the correct use of public funding and demonstrate the best value for money, Consumer Scotland must be accountable directly to the Scottish Parliament.

Consumer Scotland will also require information-gathering powers similar to those currently held by the Citizens Advice service and the Consumer Council for Northern Ireland. These should include rights to be consulted by economic regulators on matters which affect Scottish consumer interests; rights to refer failing markets to regulators; rights of appeal where appropriate against high impact regulatory decisions; powers to initiate super-complaints; and resources to sponsor and support collective actions for competition law redress under Schedule 8 of the Consumer Rights Act 2015.

A key principle for Consumer Scotland should be that it is an intelligence-led organisation which is able to follow the golden thread of shared data, allowing it to analyse current issues of consumer detriment and reduce or eliminate future occurrences. Consumer Scotland should be able to commission research, use data from partner organisations and other relevant policy and demographic data to inform its work.

Consumer Scotland should also work with businesses to help build effective and fairer relationships with their customers by contributing on consumers' behalf in formal price control review processes and working informally with regulated and unregulated firms to improve service standards. Underpinning all of this, Consumer Scotland should ensure competitive markets for Scotland and encourage better access, quality and prices for consumers. Consumer Scotland should develop effective interfaces with existing competition regimes throughout the UK for the benefit of Scottish consumers. Finally, Consumer Scotland should work for a fairer deal for Scottish consumers, making sure their voices are heard across regulated and unregulated markets.