Why consumer welfare matters
We are all consumers. When we do our grocery shop, use a bank account, visit our GP, subscribe to a new streaming service, change our energy supplier, buy a new TV or get the bus to work – these are just some examples of how we all act as consumers almost every day.
Our experiences as consumers affect our quality of life and our wellbeing. Collectively, our experiences as consumers reflect how well the economy is working for the people it is intended to serve.
- When consumers cannot access the goods and services they need, the impacts of exclusion and unequal access can spill over into issues such as poor health, debt or financial security, adding to pressure on public services.
- When consumers experience harms through poor-quality or unsafe products,
misleading information, or unfair practices, the consequences can include financial loss, stress and anxiety, and even physical injury. - When consumers lack confidence and understanding of their consumer rights they are less likely to be able meet their needs and secure redress when problems arise.
The question of how well consumers are served is fundamentally a question of how well the economy is working for the people, and small businesses, at its heart. It’s therefore a question that matters for economic growth - and for the quality of public services.
The framework for this report
This is Consumer Scotland’s first Consumer Welfare Report. The requirement for us to produce a CWR is set out in our founding legislation, the Consumer Scotland Act 2020. The Act sets out that the CWR should address two questions:
- how well the interests of consumers are being served in Scotland
- where harm is being caused to the interests of consumers in Scotland,
the nature and extent of that harm
Our response to these statutory questions is based around our Consumer
Welfare Framework which argues that consumers are well served when they:
- Can access the goods and services they need to participate fully in society
- Are protected from harm and can secure redress when required
- Are confident and empowered to understand and exercise their rights and make informed choices
The report is structured around these three pillars of consumer welfare, with a chapter on each. At the heart of the framework is a cross-cutting theme of equity and fairness. This recognises that the purpose of the report is not just to understand how well the average consumer is served. The aim is to understand how all consumers are served, taking account of their individual characteristics, circumstances and experiences.
Access and affordability: Consumers can access the goods and services they need - fairly and without discrimination or financial hardship - to participate fully in society.
Protection and redress: Consumers are protected from harm and detriment and can secure redress when things go wrong.
Confidence and empowerment: Consumers are confident and empowered to navigate complex markets, and to exercise their consumer rights.
What we found
Consumers feel protected but harms are widespread and pervasive
Most consumers in Scotland feel well protected. But this confidence belies the fact that consumer harms are both widespread and pervasive.
Harms encompass a range of issues, from unsafe products that cause physical harm to misleadingly described or priced products, and to poor quality products that cost consumers time, money or stress to resolve.
Regulation and enforcement are critical to consumers’ interests
A key reason why harms are widespread and pervasive is that the source
of those harms is continually evolving. The growth of new markets and
products - such as the implications of new online platforms for regulating
product safety for example - can increase the risk of consumer harm.
Regulators face a continual challenge to respond to these issues, and to do
so in ways that are proportionate. The report highlights examples of this
challenge - such as responding to the continual evolution of online pricing
practices that can sometimes be misleading, unfair or discriminatory.
But regulation is only one part of the story. The effectiveness of regulation
hinges critically on how it is enforced, and the effectiveness of both
regulation and its enforcement is critical to the question of how well
consumers are served. Recent reforms have strengthened some
enforcement powers, but trading standards services are under significant
pressure.
Consumers lack confidence in exercising their rights
Being able to obtain redress when things go wrong is critical if consumers’ interests are to be well served. But consumers experience of redress is very mixed. Consumers’ satisfaction with redress is generally low, and their awareness of Alternative Dispute Resolution (ADR) is limited - unsurprisingly given how complex and inconsistent the ADR landscape is.
Consumers often have confidence in their ability to understand their consumer rights. But this confidence is frequently misplaced.
Barriers to accessing ADR, legal advice and civil justice continue to limit many consumers’ ability to secure redress when things go wrong.
Affordability challenges accentuate consumer harm
All these issues are exacerbated by persistent affordability challenges.
Affordability challenges can cause harms by constraining consumers’ choices and their ability to meet their needs.
Responding to affordability challenges isn’t just a question of consumer policy. But there is a big agenda for consumer policy - for example, supporting consumers to enhance their energy efficiency or select the right products and tariffs for them; and ensuring that affordability support is effectively targeted - which it often isn’t.
Inequalities in consumer experience are stark
There is significant variation in consumers experience depending on
their characteristics and circumstances.
Those with a disability or financial vulnerability are consistently more
likely to experience a range of consumers harms, to be less confident in
asserting their rights, and be less likely to be satisfied with redress.
Perhaps more surprisingly, younger consumers are consistently more
likely to experience a range of consumer harms compared to middle
and older aged consumers.
Digital access and confidence are increasingly critical to consumers’
successful participation in markets. The digitally excluded are much less
confident in their ability to obtain reliable information to help them
make informed choices as consumers. They are also at risk of exclusion
as an increasing range of services shift online or become digital only
from energy meters and phonelines to banking and public services.
Conclusion – how well are the interests of consumers served?
Most consumers in Scotland are reasonably well served - they tend to feel protected, and are generally able to access the products they need.
However, consumer harms are widespread and pervasive. Understanding rights, let alone exercising those rights, can be challenging even for a confident and savvy consumer.
Whilst the typical consumer is well served, there are significant inequalities in experience. The consumers who are most exposed to harm are often those who are least able to manage it – the disabled, young, those with limited financial resilience, and the digitally excluded. These groups are at particular risk of being left behind in a rapidly evolving economy unless products and services respond to their needs.
This matters because how well consumers are served is not a peripheral measure of economic success but one of its clearest tests: an economy works well only when it works well for the people who rely on it - particularly those most at risk of harm or exclusion.
Data explorer tool
Explore the core indicators from the report by group and over time via our Consumer Welfare report: data explorer tool.