Consumer duty guidance: carrying out an impact assessment (draft) (HTML) | Consumer Scotland

1. Introduction

This document is a standalone version of the consumer duty impact assessment found in the Consumer Scotland consumer duty guidance document ‘How to meet the consumer duty: guidance for public authorities’[1].

It is made up of four sections:

This introduction
The impact assessment process
Annex A: A template to complete the impact assessment in Annex A
Annex B: An assessment not required template

Consumer duty

The Consumer Scotland Act 2020 (‘the 2020 Act’) introduced a duty (“the consumer duty”) on ‘relevant public authorities’ in Scotland, when making decisions of a strategic nature through exercise of their functions, to have regard to:

The impact of those decisions on consumers in Scotland
The desirability of reducing harm to consumers in Scotland

The duty is designed to improve outcomes for consumers by putting them at the centre of public sector decision making. This person-centred approach to decision making should result in better quality services and outcomes for consumers as users of public services.

In addition to the two requirements above, the 2020 Act added two further statutory requirements relating to publication of steps taken to meet the duty and having regard to this guidance. The four requirements of the Act are:

When making decisions of a strategic nature, have regard to the impact those decisions have on consumers
When making decisions of a strategic nature, have regard to the desirability of reducing harm to consumers
Publication of information about the steps taken to meet the duty
Having regard to this guidance

An impact assessment approach has been developed to help public authorities meet the consumer duty requirements. For more detailed information on meeting the duty, please refer to the core Consumer Scotland guidance document[2].

2. Impact Assessment

Public authorities should adopt a flexible, proportionate and targeted approach to meeting the duty. A proposed impact assessment approach is included in the guidance document as an advised method to improve outcomes for consumers. This approach is intended to provide a consistent method to meeting the duty, including the requirement on public authorities to report on how they have met it.

There are a number of existing impact assessments that public authorities are subject to in Scotland. By adopting a proportionate approach to meeting the consumer duty, consideration should also be given to how to adopt an integrated approach to meeting the requirements of any other applicable impact assessments.

The most appropriate approach to meeting the duty will be for individual organisations to decide, while also ensuring the legal requirements of the duty are still met. This document however focusses on how to perform the impact assessment approach recommended in the core guidance document.

What if you’re already meeting the duty?

You may feel that your organisation is already meeting the requirements of the consumer duty for some strategic decisions, and that you are already giving sufficient regard to the impact those decisions have on consumers and to the desirability of reducing harm to them. In this circumstance, undertaking the full impact assessment process might not be necessary and it may be sufficient to ensure a record is kept of how you have met the duty for this strategic decision.

An impact assessment not required template is included in Annex B to help organisations record how the consumer duty has been met in alternative ways to an impact assessment.

When deciding whether or not to complete the full impact assessment, consideration should be given to whether you have met the aim of the duty by putting consumers at the centre of your decision making and improving outcomes for them.

Regardless of how you have met the consumer duty, the two remaining requirements of the 2020 Act still apply:

Publication of information about the steps taken to meet the duty
Having regard to this guidance

The impact assessment

The proposed impact assessment approach has five stages:

Planning
Gathering evidence
Assessment and improvement of proposal
Decision
Publication

Flowchart outlining the impact assessment process

Stage 1 - Planning

Public authorities should decide whether the duty applies, and plan how to meet it if it does, at the planning stage. Key tasks at this stage include:

Decide if this is a strategic decision or not. If not, then no action is required
Decide if the strategic decision will impact on consumers. If not, then proceed to stage 5
Decide if you have already met the consumer duty for this strategic decision, if you have then proceed to stage 5
If this is a strategic decision, that will have an impact on consumers, then develop a plan for how to complete stages 2-5, including required consumer engagement
Understand the aims and outcomes of the proposal and identify alternative options

The key questions at the planning stage are whether the proposal is a strategic decision and if it will have an impact on consumers as defined by the 2020 Act. If it is not a strategic decision, or it will not have an impact on consumers, then there is no requirement to meet the duty. However, organisations are still encouraged to consider how to achieve the best outcome for consumers when making any decisions, as per the reasons set out in this guidance.

If there is no strategic decision then you can proceed to stage 5, publication. Annex B provides a pro forma ‘assessment not required’ template to document the decision that the consumer duty does not apply. Documenting these decisions will help with stage 5 of the process (publication) and demonstrating how you have taken steps to meet the duty.

If there is a strategic decision then authorities should develop a plan for completing stages 2-5, including identifying what consumer engagement is required. Part of this process will involve understanding the aims and outcomes of the proposal and identifying alternative options.

Achieving the best outcome for consumers and reducing harm to them should form an integral part of the whole strategic decision-making process. How to meet the duty should be considered from the planning stage of a proposal, it should not be treated as a tick box exercise at the end of the process.

Officials should refer to the consumer principles when designing aims and outcomes for a proposal to maximise the positive impact on consumers. Taking this approach will help organisations develop policies that better meet consumers’ needs, inspire greater trust and confidence in public authorities and lower levels of consumer dissatisfaction and complaints.

Stage 2 – Gathering evidence

Following the planning stage authorities should undertake evidence gathering. This stage is used to gather data that will help a public body meet the requirements of the duty.

Authorities should make full use of data they hold or that is available to them. Evidence should be gathered that can at a minimum answer the questions below:

What is the proposal trying to achieve?
What are the impacts on consumers?
Is it likely that harm will be experienced by consumers as a result of this proposal?
What alternative proposals are there than can improve outcomes for consumers and/or reduce harm to consumers?
How do these alternative proposals compare to the original proposal?

When considering how to improve outcomes or reduce harm to consumers, public authorities should consider how to apply the consumer principles detailed in the guidance document.

If there is a gap in the required evidence consideration should be given to the appropriate level of consumer engagement to obtain this evidence per above.

Stage 3 - Assessment and improvement of proposal

At the assessment and improvement of proposal stage officials will use the evidence gathered to answer the questions above to show that the public body has met the duty and had regard to:

The impact of a strategic decision on consumers in Scotland
The desirability of reducing harm to consumers in Scotland

The answers to the questions set out at stage 2 above should be used to assess the impact of the strategic decision on consumers and consideration given to improving the proposal to achieve a better outcome for consumers.

Whether there is a need for any additional consumer engagement should also be considered at this stage, especially if changes have been made to original proposals.

Stage 4 - Decision

The decision stage should be used to consider the findings of the previous stages, agree any changes to the proposal and set out clearly how the public authority has met the consumer duty for this particular strategic decision.

It may be necessary to have to weigh up competing interests and potential harm to different groups of consumers. Consideration of the impact on consumers in vulnerable circumstances may also carry significant weight. In these circumstances the impact on the majority of consumers may be a persuasive factor in the decision making but the final decision is for individual organisations to make, and to demonstrate why they have done so.

Meeting the duty should mean that:

The impact of the strategic decision on consumers and the desirability of reducing harm to consumers have been considered throughout the process
That an outcomes-based approach has been taken to achieve the best outcomes for consumers

Documenting how the authority has met the duty will help with completing stage 5; Publication.

Stage 5 - Publication

The 2020 Act requires public authorities to publish information about the steps which they have taken to meet the duty. Documentation from the decision-making stage will help them to meet this requirement.

It is up to individual authorities to decide on the most appropriate way to meet this requirement. This guidance does provide some examples however on possible approaches to this, including:

A statement in an annual report
Publishing the consumer duty impact assessment alongside the relevant proposal

A link to a downloadable pro forma template for an annual report statement is included in Annex E of the main guidance document[3].

Once the impact assessment process has been completed, organisations are encouraged to review how effective their approach to meeting the duty was. This will help organisations to reflect on what went well and what might be improved in the future. It will also help you to monitor whether you are meeting the duty effectively and will assist you in reporting on this. An evaluation tool to help you do this is included in Annex C in this document and Annex G of the guidance document.

3. Annex A - Impact assessment

Consumer Scotland has provided an example impact assessment template for completing the impact assessment.

A Word version of the Consumer duty example impact assessment can be downloaded from the Publications section of the Consumer Scotland website.

4. Annex B - Assessment not required

Consumer Scotland has provided an example template that could be used to record that a duty impact assessment is not required for a strategic decision.

The template should be authorised by an appropriately senior member of staff (Accountable Officer or equivalent), recognising that meeting the consumer duty and improving outcomes for consumers is a priority for the organisation.

A Word version of the assessment not required template can be downloaded from the Publications section of the Consumer Scotland website.

5. Annex C - Evaluation tool

Consumer Scotland has provided an example evaluation template that could be used by a public authority to review their approach to the consumer duty and evaluate whether a different approach would be more effective in future.

A Word version of the example Consumer duty evaluation template can be downloaded from the Publications section of the Consumer Scotland website.