BRODIES LLP: A NEW SHERIFF IN TOWN?

Legal News | 23/07/20

Consumer Scotland Act 2020: A New Sheriff in Town?

The Consumer Scotland Act 2020 was passed by the Scottish Parliament on 6 May 2020 and received Royal Assent on 9 June 2020. The Act provides for the creation of a new consumer body to be called ‘Consumer Scotland’ which the Scottish Government intends to be ‘an unashamed champion for consumer interests and rights’ in Scotland. Business Minister, Jamie Hepburn, commented that: “Consumer Scotland will be a dedicated champion for everyone across Scotland, focused on investigating consumer harm and developing solutions to tackle it.” The Act may not yet be on the radar of businesses operating in the business to consumer sector in Scotland, but it probably should be.

In addition to its functions as a consumer advocacy and information body, Consumer Scotland has wide ranging powers to represent the interest of consumers in both regulated and unregulated markets and on issues which cut across markets. In particular, Consumer Scotland is empowered to undertake investigations into business sectors or practices which it considers, cause or may cause, harm to consumers. Its powers of investigation are underpinned by the power to require that by written notice, ‘persons’ must provide it with such information as it may specify or describe. ‘Persons’ include ‘a designated regulator’, ‘a regulated provider’, both of which will be specified by regulations to be issued by the Scottish Ministers, and ‘any other person who supplies goods or services in the course of a business’. The Act provides for sanctions which Consumer Scotland may invoke if a person fails to comply with its request for information. These may include reporting the business’ failure to comply, to its designated regulator, if it has one, or making an application to the Court for an order requiring the business to comply with the written request for information.

Once Consumer Scotland has completed its investigation into a business or practice, it will, where appropriate, make recommendations for actions on behalf of consumers and these recommendations will cover government, regulators, enforcement agencies and industry. Consumer Scotland is not a regulator and so will not be taking enforcement action itself. It is likely, however, that it will work with regulators, and where, through its information gathering powers, it gains intelligence of conduct or practices that is harmful to consumers, it is likely that it would share this information with the relevant regulator. So while it is probably not fair to regard Consumer Scotland as ‘a new sheriff in town’ it can certainly be envisaged that it will play an important role in seeking to promote the consumer interest and challenging businesses and practices which it considers cause consumer prejudice.

In addition, the Act requires that Consumer Scotland must establish and operate a publicly available database of recall of goods in Scotland, which it considers to be major, either in terms of the significance of the potential risk to consumers from the goods or the scale of the recall.

The Act also imposes a duty on a ‘relevant public authority’ (to be specified by regulations) that when making decisions of a strategic nature about to how to exercise its functions, it should have regard to the impact of those decisions on consumers in Scotland and the desirability of reducing harm to consumers. It is likely that Consumer Scotland will issue guidance about this new duty.

The objective of this new statutory duty is to ensure that relevant public authorities safeguard the consumer interest in policy-making. The government recognises that consumers will not have undue primacy and that public health outcomes or environmental concerns, for example, may still take precedence, but effort should be made to minimise negative impacts on consumers where they may occur.

The policy memorandum, which accompanied the Bill states that “By imposing the duty, the government anticipates that:-

• considering and safeguarding the consumer interest will form part of the policy-making process from an early stage
• there will be an increase in meaningful consultation with consumers and consumer groups during policy development
• reviews of consumer impacts of policies will be carried out after implementation to ensure that consumers are not being unreasonably or unintentionally impacted by the real-world consequences of the policy.”

In practical terms, Consumer Scotland will not be a large organisation, and it will take some time for it to get up and running and this may not take place possibly until either towards the end of this year or next year. Much of the Act remains to be brought into force by regulations which will also provide more detail. It can be anticipated, however, that, given its objective of being ‘an unashamed champion for consumer interests and rights’ Consumer Scotland, equipped with its powers of research and investigation, will have a real enthusiasm and drive to make a positive difference for consumers in Scotland.

Frank Johnstone
Consultant
Brodies LLP