Collaborative economy: evidence analysis

8 Changing Role Of Consumers

8.1 This section provides an overview of responses in relation to the changing role of consumers within the collaborative economy, and the extent to which the distinction between consumers and providers is being blurred. These findings are based on a range of responses including those from businesses, business representatives, public sector respondents, other organisations and individual respondents.

Opportunities for the collaborative economy

8.2 The changing role of consumers was highlighted in relation to opportunities for the collaborative economy by a range of respondents. Key points raised by these respondents included:

• Several respondents, across most respondent types, noted the extent to which the collaborative economy offers individuals the opportunity to become service providers - indeed this was referred to by one respondent as 'at the heart of the sharing economy'. This included specific reference to enabling individuals to generate income from under-used assets such as homes and cars. A small number of respondents also referred to the collaborative economy as providing a platform for individuals to become more active participants in the provision of public services, and in democratic processes or social movements. For example, a public sector respondent noted potential opportunities for use of the collaborative economy in relation to public assets - in terms of individuals supporting maintenance or running of public assets, and/or public sector services making use of under-used assets.
• The diversity and flexibility of opportunities was highlighted as a significant factor in growing numbers of individuals using collaborative platforms to provide goods or services. This included reference to the extent to which individuals can balance these opportunities with other work or caring commitments, and that collaborative platforms enable individuals to become providers with minimal capital outlay. A small number of respondents also noted that improvements in digital connectivity had been particularly significant for individuals in rural areas, in terms of providing access to platforms to sell goods or services.
• Concerns noted earlier in relation to regulation of the collaborative economy were highlighted by some respondents, specifically in relation to the blurring of the line between consumers and providers. A small number of business representative respondents highlighted that individuals providing goods or services via collaborative platforms should be subject to the regulations which apply to existing businesses. In this context, it was noted that individuals entering the collaborative economy may not have prior experience as providers of services; some saw this as increasing the risk of non-compliance with existing regulations. Reference was also made to a lack of information on the number and profile of individuals providing goods and services via collaborative platforms.
• A business representative respondent suggested that the increasing numbers of individuals becoming collaborative economy providers on a hobby basis, could lead to growth in entrepreneurial activity and business start-up. This included reference to evidence on the proportion of individuals who start businesses while still in regular employment, and a suggestion that this casual use of collaborative platforms could also be translated into full-time business activity.

Challenges for the collaborative economy

8.3 Few respondents made specific reference to the changing role of consumers as a challenge for the collaborative economy. The issues raised by these respondents focused around the issue of regulation of individuals entering the collaborative economy as providers. In this context, several respondents referred to challenges around the blurred distinction between consumers and providers. It was suggested that clarity is required in relation to how regulation can be used to ensure equality of opportunity.

8.4 A small number of respondents also noted that individuals providing goods or services via collaborative platforms should be subject to the regulations which apply to existing businesses. Respondents also noted that new entrants (individuals and small businesses) using the collaborative economy may be unaware of the legal and regulatory frameworks in which they operate. It was suggested that additional support or guidance may be required to ensure that these providers understand their obligations, and appreciate the costs associated with compliance.

Protection of contributors

8.5 Relatively few respondents made specific reference to protection of contributors in the context of the changing role of consumers within the collaborative economy. Several of these respondents referred to the prevalence of individuals entering the collaborative economy as providers, and the extent to which these individuals may balance this with other employment or commitments. Some referred to the potential for these individuals to be unaware of the regulations with which they are expected to comply. This was seen as having the potential to undermine protections for consumers.

8.6 A public sector respondent suggested that consumers may have fewer rights when transacting directly with other consumers, rather than with a business or platform.

8.7 Respondents also noted that these individuals may gain an unfair advantage over established businesses if they are not complying with the full range of regulations. Reference was made to a lack of information on the number of individuals using collaborative platforms who may not be in compliance with regulations.

8.8 Several respondents also saw a need for clarity on the regulatory framework and the definitions that support enforcement of regulations. This included a suggestion that the blurring of the distinction between consumer and provider means that it can be difficult to authorities to assess which is the more vulnerable party requiring protection.

Balancing regulation with competition and innovation

8.9 A small number of respondents made specific reference to balancing regulation and innovation in the context of the changing role of consumers.

8.10 Several respondents referred to potential risks of individual service providers being unaware of or failing to comply with regulations. However, others wished to see a regulatory approach that distinguishes between individual and business collaborative economy providers. A business representative respondent suggested that consumers can feel that there is an equal exchange where the service provider is also an individual. This equality was highlighted specifically for genuinely collaborative transactions such as sharing resources, although respondents also appeared to draw a broader distinction between individuals providing services on an occasional basis, and businesses acting in a professional capacity. In this context, a small number of respondents suggested that genuinely collaborative exchanges should not be subject to the level of regulation applied to other parts of the collaborative economy.

Barriers to growth of the collaborative economy

8.11 A small number of business representative, public sector and other organisation respondents referred to the changing role of consumers and barriers to growth of the collaborative economy. The key points raised by these respondents were:

• A small number of respondents referred to a lack of knowledge of opportunities for individuals to engage with the collaborative economy, including as providers. It was suggested that raising awareness of new business models and opportunities could support further growth for the collaborative economy.
• A business representative respondent referred to existing tax exemptions, such as the rent a room scheme, as encouraging individuals to engage in occasional peer-to-peer sharing of assets to supplement their income. It was suggested that similar schemes could encourage growth of peer-to-peer sharing across other sectors, such as transport.
• A public sector respondent suggested that full enforcement of existing regulation may discourage individuals from entering the collaborative economy as providers. This respondent saw a potential need for clearer guidance for prospective service providers, and suggested that a gradual adaptation of existing legislation to suit these new business models may be more effective.

The role of government

8.12 A small number of respondents referred to the changing role of consumers and the role of government. These responses focused on the potential role of government in improving awareness of opportunities for consumers to become providers, and in removing barriers to the public sector engaging with providers:

• Respondents referred to a potential role for government in raising public awareness of opportunities for individuals to engage with the collaborative economy as providers of services.
• A public sector respondent referred to a potential role for government in encouraging and enabling public sector bodies to support greater community input to use of and management of public assets.