Consumer Redress – Towards a Single - PowerPoint Presentation

Slide1

Consumer Redress – Towards a Single Portal

Sheena Brown

Scottish Government

12-13 May 2016Slide2

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 harmSlide3

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.Slide4

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.Slide5

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.Slide6

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.Slide7

Designing an Easy to Access S

ystem

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.Slide8

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.Slide9

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

providerSlide10

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;Slide11

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.Slide12

What it means for Businesses

L

ost 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.Slide13

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.Slide14

Finding SolutionsConsistent 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.Slide15

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.Slide16

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.Slide17

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.Slide18

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.Slide19

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.Slide20

CONTACT DETAILS

SHEENA BROWN

HEAD OF CONSUMER & COMPETITION POLICY UNIT

SCOTTISH GOVERNMENT

sheena.brown@gov.scot