Since Charles blogged the other week about the mere 400 sleeps to the referendum (now just 385), the Scottish Government has published its latest paper outlining its vision for an independent Scotland, this time on Consumer Protection and Representation in an Independent Scotland.
Finance Secretary John Swinney outlined plans for a reformed, simplified system of consumer protection. The presentation and report focused on currently fashionable issues such as payday loans, cold calls and postal delivery charges, which the Scottish Government claims would be better managed in the event of independence.
A key element of the plans is to create a single Consumer Ombudsman at a national level, to integrate consumer protection, advocacy, education, advice and enforcement for all sectors. Currently, there are over 95 ombudsman schemes operating across 35 sectors (from home furnishings and laundry to caravans and timeshares).
The report proposes that the Ombudsman would support agencies responsible for economic regulation, competition regulation and consumer protection. Two different structural models are suggested, comprising either three separate agencies or a combined consumer and competition authority and a separate combined economic regulator.
The current paper seems to favour the bipartite model (separating economic regulation from consumer and competition regulation), a version of which is already being implemented in Ireland and the Netherlands. However, doubts have been expressed about the wisdom of having a single body for all competition and consumer matters, the size of which may cause problems in keeping pace with a multitude of fast-moving industries.
Left unexplained is the apparent inconsistency with the Scottish Government’s earlier proposal to create a single economic regulator combining the roles of the existing UK economic and competition regulators.
The current system (which applies UK-wide, consumer protection being reserved to Westminster by the Scotland Act 1998) operates within a wider regime of EU rules and regulations on consumer protection. Although part of Mr Swinney’s promise was to create a distinctive Scottish system, the new regime would have to meet the minimum requirements laid down by Brussels.
To add further complication, an independent Scotland would also have to take care not to ‘gold-plate’ EU rules by weighting its own system too much in favour of consumers. We blogged a while ago about the Court of Justice’s attitude to Spain’s gold-plating of the Data Protection Directive, and were reminded of that by the Scottish Government’s proposals that telemarketing companies would need to prove that they had consent for cold calls. While this would be stricter than the UK’s existing ‘opt-out’ system, there is a distinct EU Directive (2002/58) on Privacy and Electronic Communications, implemented in the UK by the PEC Regulations 2003, containing rules on unsolicited communications that apply in addition to the Data Protection Directive. That allows Member States to have an ‘opt-out’ system such as the UK’s, or to prohibit unsolicited communications without the consent of the recipient. The Scottish Government’s plans would introduce a version of the latter requirement. However, the Directive does not place an onus on companies to proactively demonstrate that they have consent for the calls. That additional requirement could potentially tip into ‘gold-plating’ territory.
Given the emphasis on contrasting these proposals with the current UK position, it may be worth noting recent developments in relation to the issues identified in the paper. For instance, the Information Commissioner has imposed hefty fines on companies making nuisance calls – my colleague Martin Sloan posted on Brodies’ Technology Blog about one such fine. The OFT (currently responsible for regulating consumer credit, though that role will transfer to the Financial Conduct Authority in April) investigated the payday loans industry and found “deep-rooted” problems in the market. Lenders were given 12 weeks from 27 June to address areas of noncompliance identified in the payday lending review. Since then, 19 of the 50 leading firms investigated have ceased to offer short-term loans and the OFT has referred the matter to the Competition Commission for further investigation. The Commission has published an issues statement outlining the scope of its investigation.
On August 28, 2013