Official Report 770KB pdf
Our next item of business is an evidence session with Consumer Scotland on its activities and performance. I welcome our panel of witnesses.
Consumer Scotland is the statutory independent body for consumers in Scotland, covering the public, private and third sectors. It is a non-ministerial office, established under the Consumer Scotland Act 2020, and it is directly accountable to the Parliament. Responsibility for scrutiny of Consumer Scotland therefore falls primarily within the committee’s remit.
I welcome David Wilson, the chair of Consumer Scotland; Sam Ghibaldan, the chief executive; and Sue Bomphray, director of operations and partnership. I will make the same appeal that Claire Baker always made, which is for members and witnesses to keep their questions and answers as concise as they possibly can. I invite David Wilson to make a short opening statement.
Good morning. Let me be the first person beyond the committee to congratulate you on your appointment, convener. I also reflect our thanks to Claire Baker, the former convener, for the interactions that we have had with the committee.
You have already described our constitutional role. I have a couple of points to add to that by way of background. One of our key roles is to advocate on behalf of consumers in Scotland, but we very much see our role as including not just devolved matters, as we have an advocacy role that goes beyond devolved matters and includes reserved matters, especially energy and post issues. We see our remit as broad, as the Parliament did in setting our legislation.
As a final piece of background information, I will say a quick word about our funding. We receive core funding from the Scottish Government, but we also receive what is called levy-based funding, which ultimately comes from consumers directly. We receive funding from Scottish Water consumers for our role on water in Scotland. We also receive levy funding via the United Kingdom Government for energy and postal services. From next year, we will become the statutory consumer advocate for heat networks, and we will receive additional levy funding from that corner as well.
I am delighted to be here, as it gives us the opportunity to describe the work that we have done and it gives you the opportunity to scrutinise our work. We are now two years old, having been set up in April 2022. We are very pleased with the progress that we are making, although there is obviously still further progress that we wish to make.
On 17 October, we published our annual report and accounts, which give a comprehensive overview of what we have done over the past year. Before giving some brief highlights, I point out that the annual report sets out that we seek to do our role as transparently and efficiently as possible. We are very pleased to get a clean audit from our auditors, and details of that are set out in the annual report.
I do not want to say too much more, but I will give some brief highlights of the sort of things that we would be keen to discuss with you. They include our work with regard to consumers overall, and particularly the research work that we have done to raise the visibility and the impact of policy thinking and policy development around consumers. Clearly, the past couple of years have been a very challenging time for consumers, not least due to the energy situation and the cost of living crisis. However, there are a range of other issues, including energy affordability, water affordability, postal services and telecommunications, that we have been working on, and there are a number of specific areas on which we have sought to advocate specific policy positions.
I will say a brief word to establish that one of our key statutory requirements is to take into account the needs of consumers in vulnerable circumstances. We have taken that very seriously when it comes to our set-up. We have an expert advisory group on consumers in vulnerable circumstances, and we have done particular pieces of work around consumers with disabilities, especially in recognising the challenges that face consumers or users in legal services. That is an area that we would be keen to talk to you about.
I will stop there. I hope that that was sufficiently short, but there is a lot of depth and a lot of issues in all of that, which we are keen to discuss.
Thank you, Mr Wilson. There will certainly be a lot of questions on some of the issues that you have raised.
I will begin by picking up on one of the subjects that you mentioned in your opening comments and one of the pieces of work that you have done, which is on postal services. The committee took evidence on concerns about the future of universal postal services, and I appreciate that Consumer Scotland has carried out some work on that. Can you tell me a little bit about that work and, specifically, what feedback you received from small businesses about the importance of those universal services? Was it different from feedback from other consumers?
I will take that question. The universal postal service, as you allude to, is extremely important for consumers in Scotland. Data published by Consumer Scotland last year found that nearly two thirds of adults in Scotland had sent first-class or second-class letters in the past 12 months, and more than three quarters had sent parcels.
Consumers need the postal service to communicate with each other. It is an important part of our social glue—our social cohesion. We need it to access essential services and to exchange letters with the national health service, banks and energy suppliers. As you alluded to, small businesses use it a lot in the way of their business, sending out parcels, making deliveries and receiving things. Therefore, postal services are absolutely essential, but there are issues with the current services—very significant issues.
First, there has been a significant decline in letter deliveries over the past decade or so. In 2011, around 14 billion letters were sent, but in 2021, 7 billion were sent, so there has been a significant decline. Royal Mail says that that is causing issues in delivering the service cost efficiently.
On the other side of the equation, consumers have been experiencing issues with reliability and affordability. Royal Mail has consistently failed to meet its targets for delivering mail on time, which is a point that comes through very much in the research that we have done. It comes through for both small businesses and mainstream consumers—individual consumers. On affordability, the price of first-class stamps has doubled in the past five years. It is now £1.65.
That has led both Royal Mail and Ofcom to put forward various proposals for reform of the service. Those include, for example, reducing the number of delivery days to three or five days a week, and there are other proposals around reducing second-class post specifically, and revising the speed of delivery targets.
From the perspective of the work that Consumer Scotland has done, it is fair to say that there are similar issues for small businesses and for individuals. Part of the reason why we cover small businesses as well is that they often behave in a similar way to individuals and have similar needs and concerns. That work shows us that there is a need for significant and comprehensive work to be taken by Ofcom, in particular, and by Royal Mail and, I suppose, ourselves in ensuring that any changes that are made to the universal service obligations will not cause harm for consumers.
In the case of small businesses, it is very much about allowing them to operate effectively in their core markets. They have already had significant disruption in relation to Brexit, for example, and we need to avoid any further significant impact on them from USO reform.
The other key aspect for us is that any reform should address the problems that consumers already experience—the ones that I referenced in relation to the affordability and reliability of the service.
Turning to what we have done to make progress in this space, I know that we have shared with the committee our detailed work on the issue—members may have seen that. We made a very substantial response to Ofcom, setting out the issues and the concerns, and we regularly meet Ofcom and Royal Mail and try to push them on this agenda. We are currently undertaking research with low-income consumers in the Highlands and in Dumfries and Galloway to look specifically at their views on how the proposed changes might impact on them, and we will engage stakeholders such as Royal Mail and Ofcom in that work.
Last month, we held a joint round-table discussion with Highland Council, which Ofcom attended, and we invited community and business groups to take part to share their views about the changes. I would be happy to write to the committee with further detail about the outcomes of that.
09:45This is an on-going and developing agenda. It is important, from our perspective and from consumers’ perspectives, that consumers’ interests are seriously taken account of by the regulator, which is Ofcom in this instance. Pressure or interest from anywhere in the public policy system is going to be very useful in keeping those issues at the top of the agenda, so I very much welcome your question and the committee’s interest in the issue.
Thank you very much for that. I will follow up on that in relation to the concerns that we raised around small businesses. I wonder whether this is echoed in your work and what your view is. One concern was that deliveries would be reduced. Not having a Saturday delivery was probably the most fundamental issue raised by small businesses. For example, businesses who produced magazines to send to customers were concerned that there would be real delays if that were to happen. Did you come across that in your research, and does Consumer Scotland have a view?
Absolutely. That is one of the issues that informs our concerns about the reliability and regularity of the service, which small businesses consistently indicate are really important to them, so we are trying to factor that in. I would be happy to write with more information and specific numbers on that. I do not have those numbers with me.
That would be very helpful, and information on the follow-up work that you are doing in Dumfries and Galloway and the Highlands and Islands would also be helpful.
I bring in Kevin Stewart, who has a question on another important issue.
Thank you, convener, and good morning. Consumer Scotland submitted a response to Ofgem’s consultation on the involuntary installation of pre-payment meters. Do Ofgem’s new rules in that area go far enough to protect consumers in Scotland?
They go a long way. There was controversy about pre-payment meters 18 months ago, and Ofgem convened the process. It was positive that it brought suppliers and consumer groups such as ourselves around the table for discussions over several weeks to look at how it should work. Ofgem put in place the temporary pause on installations. We felt that we had a substantive input into that, and we were pleased with the process that Ofgem went through.
We made a number of recommendations on the code of practice that it developed as a result of that process, including, for example, that the precautionary principle should be applied before the involuntary installation of a pre-payment meter. We also made a number of recommendations on the characteristics of households or consumers where installations would not be appropriate, such as those with children under five or others in vulnerable circumstances. The code recognised a lot of that. We are continuing to monitor that, because, as you will all know, from a consumer perspective, the proof is in the pudding when it comes to the operation of codes of practice and rules.
We are pleased with the progress, but I would not say that we are confident that we have reached the end of the journey.
Is more required to reach the end of the journey, as you describe it?
We take an evidence-led and analysis-led approach, and we work very closely with the advice bodies in Scotland, including Advice Direct Scotland, Citizens Advice Scotland and Trading Standards Scotland. We take information from their data, and we will continue to look at whether there is more that we need to do in that regard. At the moment, we do not have specific requirements, but we will continue to look at that. We will act and make recommendations to Ofgem if that is needed.
I want to move off the pre-payment meter issue and on to energy markets more generally. From my perspective, part of the issue is down to the cost of living crisis. I have seen much more in my mailbag and in my email inbox about difficulties with energy suppliers. That often leads to a wee missive to Ofgem, but the responses are often pretty grim and not very helpful, to say the least. Do you think that Ofgem serves the public well?
That is an interesting question. In our experience in recent years, Ofgem has been very proactively engaged. It has made significant efforts to reach the stakeholder landscape in Scotland on a number of issues, for example, pre-payment meters and, more recently, RTS meters, which are restricted—oh God, I am not going to give you the exact wording, but they are telecommunications meters. They operate through a radio signal, which is being turned off.
We convened something called the energy consumers network, which brings together advice bodies and various other bodies with an interest. We brought Ofgem to one of the network’s meetings a few months ago to discuss RTS meters, and I think that that was one of the factors—although not the only factor—that led Ofgem to bringing suppliers together to force them to act on the issue. Therefore we feel that there has been a positive response, but undoubtedly, as in all organisations, there is room for improvement.
Can I follow up on that?
Please. Can you be less diplomatic on it, Mr Wilson?
I should declare an interest as an ex-employee of Ofgem. That was 20 years ago, so it is some time past.
We may have forgiven you for that by this time.
Thank you. Obviously, Ofgem has a very challenging and broad-ranging job. In the interests of consumers, we need to have an effective and functioning electricity and gas regulator—that is crucial. It is also crucial that the organisation recognises and responds to the criticisms that are made of it.
I will only add that the chairman, Mark McAllister, is still relatively new. I do not know whether the committee intends to invite him to a meeting or to engage with him, but Mark has done a lot in the period since his appointment to reach out to consumer groups and, I am sure, to the industry—but I am not as close to that. He is from Scotland and he has been here since his appointment. He has visited Citizens Advice Scotland’s extra help unit, and we have engaged with him personally on a number of issues. If there are concerns with Ofgem, I know that the chair would be keen to engage with and get feedback from you as part of his leadership of the organisation.
I have to say that the communications that I get from Ofgem are often not what I would expect.
I need to ask a question about some of the experiences that my constituents have with fixed tariffs—these are folks who cannot change tariffs because they have storage heating. In reference to RTS, I have had a text again this morning about my own meters, but no real explanations are given to folk for why these things need to take place.
On that communication aspect—communication is king, or queen—do you think that Ofgem does the business of ensuring that the energy companies communicate well? Is part of the problem that Ofgem cannot really criticise the energy companies because it does not communicate very well itself?
On RTS meters specifically, the looming signals turn-off has been known about for a long time. I remember that, several years ago when I was in a previous organisation, the switch-off deadline was postponed because of pressure that we had brought to bear. There are many more RTS meters in Scotland proportionally than elsewhere in the country, for obvious reasons. It is late in the day that suppliers are being pushed into action in this space.
I completely agree with you about communication. We have made a key point throughout the process about something that Ofgem now requires energy suppliers to do, which is to have an effective communication strategy in place so that consumers are aware of the issue and so that suppliers are proactively identifying the consumers affected and are contacting them. It sounds as if you have received some positive messaging.
I would not go as far as to call it positive.
There are also what I might call operational barriers to progress. Scotland has a lot of islands and small communities. In our discussion with the sector, we came across the rule that suppliers could not deal with RTS meters belonging to other suppliers. We have raised that with Ofgem and with the Scottish Government and I am pleased to say that, although that problem has not yet been solved, it is on the agenda. For example, one solution would be that staff from one supplier could go to an island and fix RTS meters for several people, which would reduce costs, complexity and delay in operations.
Your central point about the need for effective communication with consumers is very much what we have been saying.
I have a final and very brief question that is Scotland-centric, because you have led me down that path. We have seen reports in the past few days that smart meters do not work as well in Scotland as they do elsewhere. How many complaints have you had about that and what are you doing with Ofgem and others to get that right for consumers?
There are historical reasons for the issue. There has, effectively, been a line across the middle of the UK and smart meters in the southern part have historically relied on mobile signals while those on the northern side have relied on radio signals. There are historical reasons for that, and I stress the word “historical” because, when the roll-out began, mobile signals in Scotland were not anything like as reliable as they are now.
There is work under way to tackle that. We engage often with Ofgem and with Smart Energy GB, which is the umbrella group for the companies dealing with that. There is a target date, which I think is 2030—I cannot swear to that and will get back to you with more information—to have a more universal approach. Pilots of alternative technical solutions are under way and include a pilot in Orkney.
We can learn some interesting lessons from the smart meter roll-out as we develop other technologies and adaptations in future. It is really important to have reliability and to take an approach that can endure.
My colleague Kevin Stewart asked about taking things up a level. The act of Parliament that underpins Consumer Scotland has five key areas of focus. For the record, the top two are reducing harm to consumers and increasing consumer confidence. How are those linked and do they imply a hierarchy of importance? In particular, is there any point in increasing consumer confidence if there is no resulting reduction in harm? I would like to understand how you square those up.
That is a really good question that goes to the heart of one of our key challenges as an organisation. The issue of consumer experience could not be broader; there are consumer issues in everyone’s daily lives, so, no matter how pleased we are with the progress that we are making as an organisation, it is inevitable that we cannot address every issue, which means that prioritisation is of fundamental importance.
The first part of my response would be to talk about the work that we have done in trying to communicate the importance of consumer issues and raise awareness of them. We do research work and advocacy about issues that may not be seen as consumer issues and about the seriousness of some of the detriments and harms that consumers face.
10:00Back in July, I think, we did a report that summarised areas of consumer detriment. An interesting point that came out of that is the fact that detriment varies across society. Broadly speaking, young people face a very serious set of detriments, partly because of the nature of the markets that they engage in, especially online markets. Many of the people who are most affected are the least likely to complain, to be blunt, or to seek redress, to use more formal language.
There is a set of issues. We try to identify areas where there is a clear issue or problem, areas in which we hope that we can make a difference and areas in which people are not well served by another organisation, whether an enforcement organisation or a lobby group. That process of prioritisation goes to the heart of the choices that we make, both as a board and as an executive team.
I will make a final point about harm and detriment. At the start, I made a point about our statutory remit in relation to consumers in vulnerable circumstances. That focuses our attention on work that I hope we would be doing anyway, which is looking at the challenges that are faced by consumers who are in situations in which they are most at risk of harm or in which the risk of harm is highest. That is the definition of “vulnerable consumers” in the Consumer Scotland Act 2000.
That is why we have done a lot of work on consumers with disabilities and the link with the cost of living crisis and energy affordability. Earlier this year, we worked with disability advocates and organisations across Scotland to publish a report on some of those challenges. We will shortly publish a follow-up to that, which will go into some of the detailed issues around energy affordability for disabled consumers.
The area that I want to highlight is that of the challenges that are faced by consumers who are patients with medical needs, such as people who have home dialysis or consumers who, sadly, have a terminal illness and incur high electricity bills during the end-of-life process, which they still have to pay. We want to work with other consumer advocates to advocate on behalf of consumers in such situations to provide Government with what we hope are measurable and actionable actions that it can take to address those consumers’ needs. That is the arc that we would like to follow, from prioritisation through to deliverable actions that we hope that the Scottish Government, the UK Government or regulators and other bodies can take.
That was a very comprehensive answer in which you fairly recognised the complexity of what you have to do.
Given the way in which you operate, how effective is your relationship with other key stakeholders? One could argue that you occupy quite a niche position from the point of view of your research methods and how theirs might differ.
I think that “niche” is a good description. We are a statutory consumer advocate. Although there is a statutory consumer advocate in Northern Ireland, technically there is not one in England and Wales. Many organisations play the role of consumer advocate, but we have been trying to develop a methodology for being a statutory consumer advocate. As a statutory advocate and—I hope—a critical friend to Governments, we play a role that is different from but complementary to the role of organisations such as Age UK or Citizens Advice Scotland.
Working with a variety of those non-statutory consumer advocates and building those stakeholder links is absolutely essential to what we do. Much of what we do, we do with them—certainly, it is not instead of what they do. That includes—as Mr Stewart mentioned—small businesses and others. We are very much building those stakeholder links while, at the same time, building engagement with the Government bodies, in relation to the wider stakeholder link.
I have already mentioned Ofgem. There are also Ofcom and Trading Standards Scotland in a Scottish context. We have to work with the enforcement bodies and provide them with—if you like—ready-made solutions, because we do not have enforcement powers at all. Our role is advocacy, not enforcement or direct support, in that sense.
We need to work with both stakeholders and Government bodies, and act as—we hope—a bridge between them.
That is a difficult role. Do you have any final points, Sam?
I will add to that something around how we meet our various statutory obligations.
There are statutory obligations regarding detrimental harm, and we also have statutory obligations regarding issues such as sustainability or sustainable consumption. We reach a judgment through a prioritisation process that involves asking questions such as, for example, how many consumers overall will be affected, or what the gravity of the impact or opportunity would be. Those are the type of factors that we need to take into account. Sometimes we also consider whether there is a particular Scottish interest. That is not necessarily exclusive; there does not have to be a Scottish interest, but we might consider whether there is a particular impact in Scotland. Those are the type of considerations, and each one of those is a judgment. There is not a right answer—we have to work it through.
We undertake two key types of collaboration. The first is around influencing regulators, Governments and companies so that consumer markets and services provide consumers with what they need and operate in a way that works for consumers and engages and protects them. The second is very much about partnership with the sort of organisations that David Wilson mentioned—such as CAS, Advice Direct Scotland and Trading Standards Scotland—to help them to align the consumer protection and advice services landscape. It is also about learning from them and taking their data. It is a partnership.
The 2020 act that created Consumer Scotland gave it three broad primary functions: providing advice and information to policy makers on consumer issues; carrying out research and investigations into consumer issues; and providing or securing the provision of advice and information to consumers.
You have a budget of £3.9 million to spend, but only £444,000 is spent on direct consumer advice. My question has two parts. First, why did you choose to go down the route of outsourcing consumer advice rather than doing it directly? Secondly, given that it is one of your primary functions—indeed, many of your answers have emphasised your view that you are a consumer advocate—I wonder how you view the fact that only 11.4 per cent of your budget is dedicated to direct consumer advice. Is that the right balance, and are you placing the right emphasis on direct consumer contact?
That is an excellent question, which, again, goes to the heart of some of the choices that we have had to make as an organisation.
I will kick off. I am also keen to bring in Sue Bomphray to describe some of those more detailed budget points and the money that we pass to other organisations.
The legislation is permissive, if that is the right language; it gives us a broad potential remit, covering a variety of areas. We were keen to establish ourselves as an organisation that undertakes the core levy-funded work on energy, post and water, which is not a direct consumer advice function. That is the core of what we do, and then we build from that. That is very much the journey that we have been on over the past couple of years.
We made a conscious decision not to seek to become a direct consumer advice organisation. As you have rightly said, we could do that—the legislation gives us powers in that respect—but a number of factors influenced our decision. We wanted to establish our reputation and reach in the wider landscape first of all, and we also recognised that a number of existing organisations already have that role in Scotland, and do it very well. I am thinking of Citizens Advice Scotland, Advice Direct Scotland and a number of other organisations with a more specific focus on energy and on other sectors.
In part, our initial choice was not to seek to compete in that landscape but to leverage, boost and potentially streamline it. That is our position now. Sue Bomphray can give you more information on this, but, on some of the specifics that you have mentioned, we felt that they were areas that we had the funding for. There were certain proposals and actions that we felt that CAS, in particular, could take forward, and we thought the best way of delivering them was through it. That approach will continue in future, as we have been asked to take on the role of heat networks advocate. Much of that will involve consumer-facing activity, and we are in discussion with those organisations to provide that in future.
Lastly, I would never say never with regard to developing, at our own hand, consumer advocacy or broadening out with whom we work or to whom provide support, but I want to be satisfied that we are not simply adding to an already effective landscape instead of improving it. That would be the criterion.
I will push you a little bit on that. All of us round this table are familiar with how advocacy works; indeed, we undertake it day in and day out. I would find it quite difficult to do that job if I did not hold surgeries with my constituents to understand what they needed. In a functional sense, how can you understand what to advocate for on consumers’ behalf if you are not doing that sort of thing directly? In conducting broad research, as it were, is there a danger that everyone ends up as a statistic rather than a person, and that you miss some of the more fundamental issues that you would have picked up if you had that direct contact?
Again, you have identified that very well. We do not have a specific complaints or direct advice role, but that does not mean that we never engage directly with consumers. I think that we are increasingly moving into that area, whether it be about representing consumers or whatever. We would like to move beyond the early work that we have done with the lived experience of consumers; indeed, it is definitely an area that we are moving into.
As for how we know what to advocate for if we are not getting face-to-face contact, we can build on our really strong links with the likes of Citizens Advice Scotland. Formally, we will, from next year, be funding it directly to provide us with data and insights. In that way, there is almost a symmetry: as we do our national advocacy, we are learn from its local work, while it is bringing our national advocacy approach into that local work. It is a matter of working with it in what is almost a supply chain, if you like. We are finding ways of doing that sort of thing, and I fully recognise the need to do it.
I understand. There are lots of different ways in which one can understand the consumer experience.
That brings me to my final question. Part of my reason for asking this is that I completely recognise that Citizens Advice Scotland does a great job, but its funding is under severe pressure. Because of those funding pressures, it is not the organisation that it might once have been or might hope to be.
Just reflecting on my constituency casework, I note that I am getting an increasing number of people approaching me because they are struggling to get good consumer advice to understand what their contractual obligations are with providers of goods or services, when procuring things or buying products directly from shops or online and, in particular, with the building trade. My view is that the availability of direct consumer advice is much weaker than it was perhaps a decade or two ago. What is your view of that and of your role in helping to rebuild the advice ecosystem or landscape?
10:15
In the interest of time, I note that I completely agree that, given the experience over the past few years and the cost of living crisis—it is not just to do with those aspects; there is a wider range of issues—there is the need for expert and sympathetic consumer advice across the board. It is the sort of advice that many organisations provide, and we are in the same camp as them in drawing attention to both the increased demand for those services and the need for greater provision. Please take it that we are fully behind that. Perhaps Sue Bomphray could say a bit more about how we are working with those organisations to encourage that.
Good morning, everyone. At the start, when Consumer Scotland was being set up, there were a lot of representations from different bodies about what we would do and what our position would be in the wider consumer sector. We have tried really hard not to upset those stakeholders and to work with them to complement the services that they provide.
We have taken a conscious decision not to set up another advice mechanism, because that would not be a good use of public money. We are working really closely with ADS and Citizens Advice Scotland to ensure that we complement their work. We have data sharing agreements with them, meaning that we have access to their data and they have access to ours, because we are trying to bring some coherence across the sector. We are in the process of setting up a strategic leadership group for the chief executive officers across the advice bodies, which includes Citizens Advice in England and Wales, because there are some areas for which we fund it for work in Scotland.
Again, to bring some coherence, we are bringing funding streams together. Through our energy levy from the UK Government, every year, we fund Citizens Advice Scotland to run its big energy savings network project and its “Worried this winter? Let’s chat” campaign. In the past couple of years, we have been able to fund trading standards for some of the work on scams and the television campaigns that have been done. We also fund Citizens Advice in England and Wales for the portion of its advocacy work that covers Scotland. The key is bringing all those outputs together and sharing them to ensure that, collectively, we deliver the right data to advocate for the right policy changes.
I have one final cheeky question. If we had those organisations round the table today, would they say that you have had a positive impact on the consumer advice landscape?
I think that they would. They might not have done at the outset, when we started, but we have worked really hard on relationships, and we have regular meetings with CAS, ADS and Citizens Advice to ensure that we are working together rather than against one another.
It was interesting to see that you launched an investigation in July into the market for energy efficiency and low-carbon heating products. Will you tell me a little bit more about why you chose that area for investigation? What do you expect the outcomes and impact will be from any findings that you have?
The ability to conduct investigations is a central part of the 2020 act, which imposes specific requirements about the publication of recommendations and about the nature of support for those recommendations by the Scottish Government. The act gives particular weight to the outcome of the investigations that we do.
To arrive at our choices and to develop our investigations function—respecting the importance of that in the act—we went through a significant process, bringing in somebody from the Competition and Markets Authority to help us to look at how to structure an investigation function. We did a lot of work with other organisations in looking at aspects such as prioritisation processes, governance and pre-investigation work, which I think is where the answer to your question lies.
The things that we look at in making a decision on an investigation include the nature of the market and the formality of the engagement that is required, the extent of evidence of any issues, the views of regulators and whether formal recommendations would help to progress things. On the investigation into consumer issues in the market for low-carbon technologies and energy efficiency, we identified that there is a clear opportunity to influence developments because of the forthcoming heat in buildings bill and any associated regulation. That was, I suppose, a clear tick in the box and it showed that this is something that we need to look at.
First, there is a significant and wide consumer impact, because we know that 2.4 million homes need to be upgraded by 2045, so it will affect a significant majority of the population of Scotland. Secondly, we know that there is a reasonable evidence base. Although the numbers are still small, there are a lot of early adopters of technologies, and we can use that evidence to develop the case for the investigation and think about how consumers should be approached in the roll-out of the net zero agenda, how to protect consumers and how to encourage them.
We also know that installing a heat pump is a complicated process. I know that from my experience. It can be a confusing market at times, and there is evidence of scams. It is perfectly possible to work your way through it, but it is not straightforward, so there are definitely things that we can do to improve that.
On the process that we have gone through since we launched the investigation in July, we had a call for evidence, and we have had a number of submissions and engagement, with evidence from various stakeholders including Trading Standards Scotland, the Competition and Markets Authority and Home Energy Scotland. We have had round-table sessions with stakeholders to thrash through some of those issues, and although I cannot prejudge the outcome, the areas for recommendations might well include improving incentives and providing extra clarity for consumers, and reforming the ways that rogue traders, misleading information and scams are dealt with. I am sure that we have all seen a million invitations on solar panels and everything else on Facebook. How do we address those? The key issue in the market, I suppose, is how we can give consumers confidence that they can make the right decisions and find the right people. We also need to improve support for consumers on the small number of occasions when, sadly, things go wrong.
We are looking to publish the investigation by the end of the financial year. We are making sure that we are aligned with the heat in buildings bill process, in order to be able to inform that.
Thank you. That is really helpful. Part of the reason why I asked the question is that I have had a number of constituency cases in which individuals have claimed that they were, in effect, mis-sold technologies. It certainly seems that companies have come in and made lots of promises about what will be delivered, but the outcomes have not been what was anticipated.
Part of the complication in this space is that there are various Government schemes that provide funding, and there is an assumption on the part of consumers that what they are offered is somehow an official Government scheme. When it turns out badly, they come to me and say, “Will you raise this with the relevant Government department?”. The Government department says, “Well, the delivery of the scheme has nothing to do with us. We just provide the funding.” There is clearly a perception issue, is there not? People think that, because there is Government funding, what they are offered is somehow an official Government scheme, even though it is delivered by a range of third-party contractors who might or might not be up to scratch. Are you looking at that area?
That is one of the central questions for the investigation. There is a sad and relatively long history of that since all the scams around the green deal a decade or so ago. You are right: the official nature of a scheme will make people have confidence. On how we bridge that gap and ensure that people are effectively protected in the market, it is key to build sufficient consumer confidence in the mainstream population that they can proceed confidently in this space. That is central to our investigation. It is vital for consumers that such measures are dealt with and appropriately addressed, but it is also vital to our success in meeting net zero targets.
The short answer to your question—sorry; that answer might have been a bit long—is yes.
You might not know the answer to this, but is it currently the case that, if somebody is accessing funding through a Government scheme, there is an accreditation for whoever is doing the installation?
Yes—there are accreditation schemes, although I do not want to overly assert my knowledge of the detail. Suppliers have to be accredited, but there are sometimes issues with the way in which those accreditation schemes operate.
In addition, anecdotally—I stress the word “anecdotally”—I am certainly aware that there have been cases in which suppliers have been registered with a scheme but have then dropped out of it. There are a number of issues in that space.
This is my final question. Are you still taking evidence, or have you concluded that work?
We have pretty much concluded our evidence taking, but we are always open to more.
All right—thank you.
I will make some brief remarks, almost as a summary of the responses. One of the features of the market that is developing around renewable energy, which is writ large across many of the areas in which we work, whether it is legal services, wider energy matters or transport, is the importance of effective market regulation and effective redress in particular situations. With the best will in the world, there will, in some markets, always be concerns about regulation and redress. That element is central in so many of the markets that we deal with.
I reiterate the key point that Sam Ghibaldan made. With regard to the challenge of achieving net zero, the regulation of the heating market is crucial, as is, more widely, regulation and redress across a range of different areas, whether it is electric vehicles or other things. That tells us that the key point is that achieving net zero is fundamentally a consumer challenge. The UK Climate Change Committee says that around 60 per cent of the emissions reduction that still needs to happen would have to come from very direct consumer choices, and that is why regulation and redress is so important.
I call Gordon MacDonald.
Good morning to the witnesses. I want to ask you about the recall of goods and product safety. Under the 2020 act, you have
“a duty to establish, or secure the establishment and operation of, a publicly available database of recalls of goods in Scotland, where either there is a significant risk to individuals or the scale of recall is significant.”
That is from your annual report. Can you give us an update on where we are with that?
Yes, I can do that. You are right. Interestingly, between the passing of the 2020 act and Consumer Scotland coming into being in April 2022, a database that broadly fulfils that function was established by the Office for Product Safety and Standards. We have spent a lot of time looking at what is available out there and considering whether there would be any merit in setting up a separate Scottish database, and we believe that there would not be.
The OPSS database covers the whole UK and covers a broad number of products. The committee will be aware that there are five or six other separate product recall databases that relate to things such as medical devices, vehicles and food. We are looking at how available those databases are to the public; where people go to find out if there is a recall; how those databases operate; and whether they would represent fully the needs of consumers in Scotland.
The set-up of the OPSS database involved a cost of circa £5 million, so we are not in the funding bracket to be able to do anything like that ourselves, but we have been able to work closely with the organisation. We are part of its consumer reference panel, which meets monthly, and we have contributed some funding to increase the size in Scotland of the annual surveys that the OPSS does on consumer detriment and recall.
The OPSS’s biggest challenge is to increase awareness of its database, and we are trying to do that, too. It is not the type of database that a consumer would log on to once a week and say, “Ooh, I wonder if my Bosch dishwasher is featuring this week.” There is much more of a push, and the OPSS is really trying, to shift the responsibility on to, first, manufacturers and, secondly, organisations that can help to publicise that database. For example, the OPSS works closely with organisations such as the Royal Society for the Prevention of Accidents, which can then promulgate the information. Where big-ticket items are involved—members might remember the stories about kids’ hoverboards catching fire, for example—the OPSS will run big publicity programmes. Our approach at the moment is to increase awareness of the database. We are looking to build something on to our website.
10:30
You are saying that it is your responsibility to raise awareness of the database. I had a look at it, and it is probably the worst website I have ever seen in my life. It is a list of descriptions, with hyperlinks to click on that take you to a long list of attributes to that item. Then, at the very bottom, you click on another link and you eventually see a photograph that is about the size of a postage stamp. It is not user friendly.
There does not seem to be anything proactive about making alerts to the public. I know that you guys are not front facing in dealing with individual consumers, but you put out two alerts on your Twitter account in the past 48 hours. One, for bikes with a high risk of injury, has had 140 views, and the other, for a vacuum cleaner with a fire risk, has had 152 views. Do you think that that level of hits is acceptable? What will you do to address that, bearing in mind that we are a population of 5.5 million and that the website that you are pointing everybody to is not user friendly?
It is a complex area because there are so many product alerts. The fundamental basis has to be putting more of an onus on manufacturers.
How does the public find out?
Manufacturers should inform customers.
That happens only if the customer has registered the product. If customers do not register their product, which is the case with most people, they will never find out unless somebody rolls out some kind of publicity regarding the issue.
As I said, it is complex, because a lot of manufacturers are very good at contacting customers who have bought digitally. They can get in touch and say, “We know that you have this product”. That covers one part of it, but there are other parts. We are working on how we can make promulgation of the information more effective. That is why we are working with a lot of the charitable bodies, and we are helping the OPSS to map the relevant bodies in Scotland to get the information out there. It is not realistic to be in a zone where everyone has to go into the database once a week and check all their products; there are so many recalls. It is about sifting through and getting information out proactively to consumers, whether that is through consumer bodies or directly to consumers.
My concern is about significant issues—that is what it says in the 2020 act. What are you doing to publicise problems that are significant, either because of the safety of the product or because there is a substantial impact on the public because of a particular item? There does not seem to be anything.
That is where we are linked in, as I mentioned earlier, with the OPSS and all the bodies that it works with. We are trying to increase that number of bodies because those bodies will have interests with those consumer groups. I mentioned ROSPA. There will also be bodies that deal particularly with child or baby product safety. We are trying to work with those bodies to promulgate the information.
We do not have the capacity or funding to set up a separate database, and I do not think that that would be good value for public money. Neither—we talked about advice earlier—
You do not have to set up a separate database. What I am getting at is how you should publicise something significant. I am not talking about every single item. If you want to be linked to that website, that is fine, but how do you deal with the significant issues outwith that? You also have a responsibility to ensure that the website remains up to date. The information on the website relates to the recall of goods register, and there are opportunities to highlight and register wider pieces of Consumer Scotland work where relevant. That is the responsibility that you have, but that work does not seem to be happening.
We can certainly take that away and look at it. We are working really hard with the OPSS and all the bodies that it works with to get information out there with product safety alerts. Those do not come directly from us, which is perhaps something that we can look at doing as well.
Adding to what Sue Bomphray is describing, I think that we agree that a lot of work is happening behind the scenes on that to assure ourselves about the Scottish element and technically fulfil the remit in the 2020 act.
On the front-facing, consumer-facing aspect and our communicating in a more visible and effective way, we are very comfortable with that and are actively wishing to move into it. You are right to say that this is, perhaps, an area that we are still building on, but, as Sue Bomphray has described, it is not about building a database; it is about communicating the information and getting it to consumers. On that, I think that we entirely agree.
Thanks very much.
I call Lorna Slater.
Thank you very much for coming in today. I am very grateful for your work, especially on behalf of vulnerable people.
I notice that you have made a series of recommendations to public and private bodies, both substantial and small. I am particularly interested in your recommendation about reforming tariffs to Ofgem, which I would absolutely support. What is the pattern of take-up in that respect? Do you find that public bodies and Governments are more or less open than private bodies? How effectively are the recommendations taken up? Obviously, you are doing a lot of good work and are making excellent recommendations, but how far do they go?
I shall kick off, but we will probably all want to say something. It is such a good question.
There is, perhaps, a formal answer that I can give you with regard to what we do. We have instituted as part of our performance framework—I warned you that it was going to be formal—what we call a recommendations register. Where we make a specific proposition or recommendation, we formally track it; we might say to, for example, Ofcom that we want it to do X, and, if they do it, we try to track that and any impact in a formal way and in formal language. Obviously, that takes time. Much of the influence that we want to bring is to do with not just formal recommendations but informal engagement and so on.
As a very high-level answer to your question, I would say that the level of engagement and the willingness to listen to what we have to say and to work with us as a new statutory independent public body has been strong across the board. We are certainly getting a good hearing, whether it be from the Scottish Government or, indeed, the UK Government. As for the UK-wide regulators, I have repeatedly mentioned Ofcom and Ofgem; we have worked very closely with the CMA; and we are building links with the new National Energy System Operator. Again, good links have been established, and there is a firm foundation to build on.
Perhaps Sam Ghibaldan and Sue Bomphray can add to this, but there are a couple of examples that I could highlight where we have recommended X and the organisation in question has gone on to do it. That is important, but it is clearly just one part of our overall influence and engagement.
I will try to give you a short answer, but it could be long. I will try to keep it brief, though.
The sort of influence that David Wilson has referred to covers a really wide range of partners, as you have suggested in your question, but our focus has been on building quite strong working relationships with the likes of the CMA, Ofgem, the Financial Conduct Authority and the Consumer Council for Northern Ireland, which, as a longer-existing statutory consumer body, has been really supportive and helpful to us in our development.
As for some examples of how that has worked, we signed last week an innovative memorandum of understanding with Scottish Water and the Water Industry Commission for Scotland that is designed to put consumer interests and perspectives right at the heart of the strategic review of Scottish Water’s charges for the next charging period from 2027 to 2032. We had really positive engagement in thinking about how to build consumer research and consumer views into the process. We have had an impact in that respect, with a very positive reception to the need for that approach from the regulator and Scottish Water. Moreover, as David Wilson has mentioned, we are signing an MOU with the new National Energy System Operator later this month.
With regard to Ofgem, David Wilson has referred to our consumers in vulnerable circumstances expert committee, which comprises our staff as well as people from CAS and other bodies who have direct face-to-face experience. Last month, Ofgem came to that committee to discuss its emerging vulnerability strategy so that we could get some insight into and information on it. Those are really positive examples of the sort of thing that we are doing.
Two weeks ago, we published recommendations on water affordability for the Scottish Government to address issues in relation to the fact that around 10 per cent of people in Scotland are in water poverty. Those recommendations followed not only significant research and analysis by us but a lot of working with the Scottish Government, Scottish Water and the Water Industry Commission for Scotland to refine and develop them, to ensure that we were confident that the recommendations that we were presenting were workable and achievable. As I have said, those are now with Scottish ministers.
One of the key things that we have always consciously done is to take an evidence-led and analytical approach, and we are finding that our stakeholders, be they regulators, companies or governments, are responding well to that. When we started, we did not have much of a hinterland, but we are now getting to the point where we have a more substantial base of evidence, research and other things that allow us to engage ever more effectively.
I have one very quick question—
I am conscious of time.
It is my final question, and I think that it will be a quick one.
I am thinking about energy consumers when I ask this, but it might be relevant to other consumers, too. With regard to customer service and experience of, say, tariffs and so on, I know that companies are moving to artificial intelligence for a lot of that customer interaction. How does that strike you? Is it an opportunity or a worry?
That is a big question. In our reports a couple of months ago, we set out some of the challenges that consumers are facing in general, and I think that AI is clearly going to have quite a significant impact. Indeed, the utility sector is an area that it will impact on, and we will certainly want to monitor and, potentially, investigate it in future. I would say that, with regard to some of the technological solutions to energy supply—this takes us back to Mr Stewart’s earlier questions—it is an area that, as part of our statutory energy role, we would want to monitor very significantly.
That brings us to the end of our evidence session, and I thank the witnesses for their comprehensive responses to members’ questions.
I suspend the meeting briefly to allow for a changeover of witnesses.
10:42 Meeting suspended.Air adhart
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