Consumer Institutions

Ed Davey Excerpts

Tuesday 21st June 2011 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I am today publishing a consultation on proposals to reform the landscape of consumer institutions. A copy of the consultation document has been placed in the Libraries of both Houses and will be available on the BIS website.

The Government’s objective in pursuing and implementing consumer policy is to empower consumers to make wise decisions when purchasing goods and services. Empowered consumers embrace new products and services and demand choice, thereby stimulating competition and innovation from traders as well as high standards of consumer care. It is the investment and quest for efficiency which drives innovation and growth in the economy. Consumer empowerment is therefore a vital part of the Government’s growth agenda as well as a key element of its broader citizen empowerment mission. (The Department has also led the development of a cross-Government empowerment strategy which was published in April as part of the growth review.)

In this context, the consultation document sets out proposed reforms to the UK’s consumer institutions (the scope of the consultation excludes those institutions focused solely on financial services or on public services such as health). These reforms are designed to strengthen the front line for consumer empowerment and protection while cutting down the complexity, confusion and duplication that accompanies the proliferation of bodies.

The proposals set out in the consultation document have been guided by the following objectives:

Reducing complexity of the consumer landscape—At present, there is a plethora of publicly funded bodies involved in consumer advice, representation and enforcement. Not all of these enjoy wide public recognition, and it may not be obvious to consumers where they should go to get the advice or redress they need. The Government therefore want to simplify and streamline the institutional landscape.

Strengthening the effectiveness of consumer enforcement—Effective enforcement of the law is essential to protect consumers from rogue traders and unfair market practices. A recent National Audit Office (NAO) report has identified the costs to consumers, and hence the economy, of sharp practices as £6.6 billion. At present, responsibilities for enforcement are split between local trading standards and the Office of Fair Trading (OFT). Trading standards face particular challenges as a result of reduced local authority spending, while the NAO has pointed to problems of overlap and lack of co-ordination between trading standards and the OFT. The Government therefore want to clarify responsibilities and ensure better use of limited enforcement resources through more effective leadership and integration of effort around the country.

More cost-efficient delivery, closer to the consumer front line—Ensuring the cost-effectiveness of consumer advice, representation and enforcement is increasingly critical as public resources become more constrained. Streamlining bodies and maximising the benefits to be achieved by linking national activity to local intelligence and front-line delivery of advice and enforcement is one of the ways in which this can be achieved.

In order to achieve these objectives I am proposing that responsibility in future for each aspect of consumer advice, representation and enforcement should be clear and should rest principally with one of three key institutions:

The Citizens Advice Service comprising Citizens Advice and Citizens Advice Scotland. The Government propose that almost all central Government funding for consumer information, advice, advocacy and education (except on consumer finance) will transfer to Citizens Advice which enjoys high recognition and trust among the public as well as a track record of effective advocacy. The Citizens Advice Service would become the key consumer advocate for the Government.

Trading Standards comprising Local Authority Trading Standards Services (LATSS), the Trading Standards Institute (TSI), the Association of Chief Trading Standards Officers (ACTSO) and the support infrastructure offered by the Local Government Group. The Government propose to deploy national Government funding to facilitate a more integrated approach to national and cross-boundary threats. This activity would be more effectively co-ordinated at national level by chief trading standards officers to ensure that enforcement gaps do not arise and that activity overall is better targeted.

The proposed new Competition and Markets Authority to be created by merging the OFT and the Competition Commission, will play a key role in ensuring that markets are operating fairly and in the interests of consumers. It will have powers to investigate markets in which there are or may be structural problems and to use competition or consumer law to resolve these.

The first two of these groups have high public awareness and trust levels. Their activities reach very large numbers of consumers in practical ways.

The consultation proposes: transferring the functions of consumer focus to the Citizens Advice Service; transferring most of the consumer enforcement functions from the Office of Fair Trading (OFT) to Local Authority Trading Standards Services; and transferring the OFT’s information, education and advice functions (including the consumer direct helpline) to the Citizens Advice Service.

As a consequence of transferring its functions, consumer focus would be abolished; it is listed in schedule 1 of the Public Bodies Bill currently in the House of Commons.

Consumer policy is reserved but a number of the proposals in relation to trading standards may be applied differently in Scotland as responsibility for local authorities is devolved. BIS has produced this consultation following discussions with devolved Administrations and taking account of their views.