Consumer Redress – Towards a Single Portal Sheena Brown Scottish Government 12-13 May 2016

Advantages of CADR A route to resolution outwith the court system Less intimidating for consumers Lessens burdens on courts cheaper and quicker for both businesses and customers Can help re-establish business and customer relationship Can be a tool to help businesses improve, and for regulators and enforcement agencies to detect trends of consumer harm

3 Key Features of Good CADR Model Should be effective: able to put things right in a consistent way that is seen to be fair by both consumers and industry. Efficient: can resolve issues in good time, and share learning in realtime with relevant organisations. Easily accessible: consumers should be clear on where to go and what to expect when they raise a complaint.

Designing an Effective System (1) An effective consumer redress scheme should include the following five features: Provides consumers with advice and information; Provides dispute resolution if consumer unable to resolve complaint directly with organisation; Capture and aggregate market data on number and type of complaint; Feedback of information to identify issues and trends; Pressure on market behaviour.

Designing an Effective System (2) A consistent CADR model that supports and is supported by regulation and enforcement will add value by: Changing focus to putting things right for consumers and businesses, allowing sharing of lessons learned, future harm prevention, assisting businesses to comply with existing regulatory principles and, where necessary, flagging up the need for new regulatory standards to tackle undesirable practice; Providing public and regulators with an easily identifiable route for when breaches do happen and ensuring appropriate sanctions are in place to punish the most serious misconduct.

Designing an Efficient System Need to ensure there is a clear redress process that outlines: Timescales for complaints handling and when complaints can be escalated to CADR providers; The types of complaints that will be handled by CADR providers, and the timescales for doing so; The remedies that ombudsman can offer How intelligence from individual complaints will be aggregated and shared with regulators and enforcement agencies.

Designing an Easy to Access System A consumer should be able to find the right help when they need it, no matter which sector their complaint relates to. A CADR system should reflect that consumers do not care whether their complaint relates to private or public sectors; they simply want resolution. Since making a complaint and seeking advice about how to complain are often linked process, links between consumer advice provision and CADR providers should be strong. As far as possible, when a consumer raises a complaint in any sector, the process should be the same.

Current UK CADR Provision Different providers deal with private and public sector disputes – in Scotland, Scottish Public Services Ombudsman (SPSO) covers almost all public sector disputes. In private sectors, some ombudsmen are required by statute, such as the Financial Services Ombudsman, but most have developed on an ad hoc basis. Different providers have different standards and procedures.

Implementation of EU Directive Following the EU Directive on Dispute Resolution, all sectors must now have an accredited CADR provider, and businesses must direct consumers to such a provider following a dispute. The Chartered Institute of Trading Standards (CTSI) is the main competent authority for accreditation purposes, but there are others for specific markets, such as energy and telecoms. As of January 2016, 34 consumer CADR providers were accredited in the UK. Ombudsmen Services and the Retail Ombudsman both offer a residual body for disputes in sectors without a dedicated CADR provider

Issues with UK System Remains fragmented/complex; No requirement that businesses use CADR; Multiple competent authorities for accreditation ensures different standards may persist; Businesses must direct consumers to accredited CADR bodies, but may use different body– in legal sector in Scotland, for example, the statutory redress body is not accredited;

What it means for Consumers According to the 2016 Consumer Action Monitor report, 66 million complaints were not acted upon. 45% of people did not take complaints further, believing it wasn’t worth the hassle. Number of CADR providers makes it challenging for consumers – especially most vulnerable – to navigate a route to redress. Different standards between providers makes it difficult to transfer learning from one complaint to another.

What it means for Businesses Lost opportunity for business to salvage relationships/reputation when consumers give up on finding resolution. Harder to learn from past mistakes and to put things right. Delay in detecting unscrupulous behaviour or patterns of error leaves businesses who want to do the right thing vulnerable for longer. .

What it means for Consumer Protection Lack of formal systems to facilitate information sharing between redress providers, or with other consumer organisations, regulators and enforcement agencies; Fragmentation, combined with reduced uptake of CADR, limits ability to spot trends, prevent future consumer harm, and help businesses improve.

Finding Solutions Consistent standards across redress providers; Mechanism to ensure consumers are transferred to the correct organisation at the right time; Fewer bodies to make data gathering and sharing easier; Increased partnerships between consumer protection agencies.

An Umbrella Body This is the model adopted by the Geschillencommissie in the Netherlands. A network of over 50 sector-specific boards, are overseen by the Foundation for Consumer Complaints (SGC), which helps to harmonise standards and processes across all providers. .

A Single Body One organisation, suitably resourced to deal with all complaints, no matter which sector. SPSO or Ombudsman Services are examples of such a model. Both hear disputes in a range of areas, but have standardised processes.

A Market-Driven Approach Market driven providers agree common standards/good practice, and a third party, such as Resolver, provides a single access point to direct consumers to the right provider.

The Scottish Government View The devolution of consumer advocacy and advice to the Scottish Parliament offers an opportunity to improve outcomes for consumers in Scotland. Although redress is not included in the package of devolved powers, there is scope to work with the market of CADR providers to build on existing good practice and develop an easier route to redress. Key to this will be strengthening and consolidating links between consumer advice provision and redress providers, as well as establishing mechanisms for better intelligence sharing between regulators, consumer bodies, enforcement agencies and redress providers.

Conclusion No quick fixes – single portal will not happen overnight. However, there are quick wins that could improve outcomes for consumers and businesses in the short term, and lay the groundwork for a more unified long term solution. The market can play a key role here, particularly by coalescing around good practice, and maintaining and building partnerships with related consumer protection organisations. Finally, raising awareness of the benefits of redress, not only for consumers but also for industry, is vital work all of us should continue to pursue. .

HEAD OF CONSUMER & COMPETITION POLICY UNIT CONTACT DETAILS SHEENA BROWN HEAD OF CONSUMER & COMPETITION POLICY UNIT SCOTTISH GOVERNMENT sheena.brown@gov.scot