Response to the Working Group on consumer and competition policy

Advocacy

The Working Group identified the need for a robust system of consumer advocacy in Scotland. It considered the distinction between general consumer advocacy and advocacy for the regulated sectors and highlighted the technical knowledge required to deliver the latter. It recommended that advocacy in Scotland be prioritised through a work planning process designed to take account of the level and impact of consumer detriment and the likelihood of achieving significant change.

The Working Group noted that the Scotland Bill (as amended) will devolve competence for consumer advocacy in the post and energy sectors to the Scottish Parliament. It recommended that the Scottish Government should consider how best to promote links with regulators in other sectors, for example through Memoranda of Understanding (MoUs).

The Working Group noted the involvement of the Customer Forum in the price review settlement for the water industry in Scotland and recommended that the Scottish Government should work with other regulators to pilot approaches which allow direct input from Scottish consumers.

The Working Group recommended that Consumer Scotland should be given responsibility for delivery of consumer advocacy, both across regulated and unregulated sectors.

Scottish Government's response

The Scottish Government recognises the important role that consumer advocacy has to play across all sectors of the economy and particularly in the regulated sectors such as energy, telecoms, transport and financial services. In the regulated sectors, consumers are reliant on services with often limited options for switching. In this context, harm can have a tangible impact on quality of life, employment prospects and financial stability.

We agree with the Working Group's assessment that consumer advocacy should be delivered by an organisation with the skills and resources to carry out research, collate and interpret diverse and complex data and understand how markets operate. Specialist expertise is needed to understand highly technical and fast-moving markets. An effective advocacy body must be capable of acting as a bridge between consumers, regulators and policymakers. It must be capable of communicating the consumer interest while also interpreting the language and context of regulation.

We have already begun work on developing a model of consumer-focused economic regulation, building on the approach adopted in the water sector, where advocacy is already devolved to Scotland. As highlighted by the Working Group, in the latest price review Consumer Futures Scotland, Scottish Water and the Water Industry Commission for Scotland together created the Customer Forum which put customer representation at the heart of the regulatory process. The Customer Forum negotiated a settlement on prices and service levels with Scottish Water leading to an agreement that accurately reflected customers' priorities and preferences.

On devolution of new advocacy powers to Scotland, we will work with regulators in the post and energy sectors to begin to embed a consumer-focused model. We will continue to build relationships with regulators in other sectors to ensure the Scottish consumer-focused approach is taken into account.

Next steps

• In considering the possible form and functions of a dedicated consumer protection body for Scotland, we will take account of the Working Group's recommendation that it should be given responsibility for delivery of consumer advocacy, both across regulated and unregulated sectors.
• We will work with regulators, industry and consumer groups to determine the current role of consumer advocacy across all sectors of the economy and identify where work must be done to strengthen its impact.
• We will work with regulators across all sectors of the economy to champion a consumer-focused model of regulation.