Smart data in digital markets

Our response

Consumer Scotland welcomes the opportunity to respond to this consultation on a proposed smart data scheme in digital markets. We have previously engaged with DESNZ on the development of a smart data scheme in the energy sector,[1] and our feedback on the opportunities and risks that such a scheme may present for digital consumers mirror the issues highlighted in this related call for input.

Consumer Scotland welcomes the ambition to develop a smart data scheme in digital markets. The digital markets that this smart data scheme would be developed  already utilise significant amounts of data for commercial purposes, which can lead to consumer detriment in a number of different ways, including diluting consumer choice and control over personal information .[2] Giving consumers more control over how their data is shared, and who with, could allow consumers to make more conscious and informed choices about how their data is used going forward.

Whilst a smart data scheme in digital markets could bring benefits to consumers, there are also risks. One risk is that the benefits of schemes that come forward do not outweigh costs. But there are also risks that a smart data scheme could cause harm to consumers if it is misused (e.g. through unsolicited contact, promotion of inappropriate products, or if it creates unfairness for consumers by for example penalising them directly or indirectly).

Partly because of these risks, many consumers are understandably wary about consenting to share their data. As we set out in our response to DESNZ’s consultation on an energy smart data scheme, building and maintaining consumer trust in a smart data scheme hinges on a number of factors, including:

• The ability of consumers to control which aspects of their data is shared, and for what purpose. It is important that consumers can revoke their consent to data sharing if they desire. Consent should not be one-off, but should always be at the  consumers’ discretion.
• The deployment of rigorous processes for authorising Third Parties, monitoring how ATPS are using consumer data, and evaluating the extent of benefits and any harm to consumers from that use of data.
• The effectiveness of reporting and enforcement. Active monitoring and speedy enforcement will be key to ensuring that the scheme is taken up by consumers. To support this, consumers should have a mechanism to flag potentially inappropriate use of their data, to act as a reporting mechanism for investigation and enforcement when needed.

Consumer Scotland recommends that the principles previously set out by Department for Business and Trade (DBT) could be better embedded in this proposed scheme to ensure consumer trust. These are authentication, transparency, control, accountability, and redress.[3]

Additionally, consideration could be given to implementing Which?’s model for smart data trust frameworks[4] as part of the design framework to support consumers and ensure they feel confident in engaging in the scheme.

These issues of consent, authorisation and enforcement will also need to be considered in the context of the potential integration of consumers’ data with data from other sectors in the future. Consent and control across multiple sectors could be difficult for a consumer to navigate if there are separate control portals for each new scheme.

We agree with the CMA that respective smart data schemes should be interoperable. If these schemes are not developed  this way from an early stage, this risks significant, costly and time-consuming work to align models, frameworks and infrastructure at a later date.

It is critically important to support consumers in vulnerable circumstances and those who are digitally excluded. Here, the challenge is to ensure that these consumers are not left behind, unable to take up the positive  opportunities that data sharing can present, whilst also delivering appropriate safeguards to ensure their ongoing informed consent. .

Finally, we would welcome the government setting out different possible models of oversight that could ensure the proposed scheme is suitable for consumers. A strong, and proportionally represented, governance model will be important for establishing delivery and management arrangements of the scheme that consider the needs of all stakeholders equitably.

Question 1. What issues do customers face in accessing their data held by digital markets firms and sharing that data with third parties?

The data that digital markets firms hold is valuable to those firms, as well as to data brokers. The CMA has observed limited competition in some digital markets,[5] and in these circumstances there may be limited opportunities for consumers to use their data (once accessed) in order to access new or different services, rather than simply to  port some services – for example, a consumer buying a new phone and needing to switch from, for example, an Apple operating system to Android.

We would therefore welcome DSIT providing more detail on what it sees as the key opportunities for consumers through improved access to data, and also how it might help seek to expand these opportunities in future. Clear communication will be necessary to highlight any benefits to consumers, and to ensure that consumers are aware of any choices they have.

Question 2. What use cases do you believe could be supported through a Smart Data scheme to address those issues, including types of products and services that ATPs might be able to offer, and what outcomes could this result in?

Access to competitive markets in many sectors increasingly requires consumers to have access to digital communications services  in order to compare across different providers, products and services. Furthermore, to receive support from companies, consumers are increasingly required to make contact online as many companies seek to take a ‘digital first’ approach to customer services, with widespread deployment of tools such as chatbots to provide consumer support.[6]

The proposed data scheme could have the potential to make navigating support, advice and redress easier in digital markets for consumers, particularly if they are in vulnerable circumstances. For example, consumers could use the smart data scheme in digital markets to inform the businesses they deal with of their vulnerabilities, such as through a third party Tell Us Once scheme,[7] which could then ensure the business can tailor its interactions with those consumers appropriately. This could include support such as providing product details or manuals in braille or through other assistive services if a consumer had a vision impairment.

Question 3. What types of data and data holders would need to be in scope of a scheme in order to support any business models and address data access issues and use cases you have identified above?

No comment.

Question 4. What are your views on the feasibility to deliver a digital Smart Data scheme? Please consider any current or planned industry developments or changes that might affect delivery and highlight any key challenges.

As noted above, limited  competition in some digital markets could act as a  constraint on the potential feasibility of this proposed scheme.[8] We welcome the CMA’s new role in improving competition in digital markets; however it will take time before that new regulatory framework bears fruit for consumers.

Additionally, the data which may be included in a smart data scheme is likely to be of value to digital market firms. It will therefore be important that appropriate governance mechanisms are in place to oversee the operation of the scheme, to ensure that it is delivering the intended consumer benefits.  We recommend that government provides further details about its proposed governance framework for the scheme.

Question 5. Do you have an initial or provisional view on the likely impacts (positive and negative) on:

• Existing and future customers

• Data holders

• Small and micro businesses

As we stated in our response to DESNZ’ consultation on a smart data scheme in the energy market, we would welcome government considering the evidence base in relation to consumer take-up of open banking to understand the possible profile of those consumers who are more likely to take up a smart data scheme in digital markets. This would be helpful for informing this and any possible future smart data schemes to understand who early adopters might be and potential barriers to take-up.

Generally, those consumers who are actively engaged with new technology and have the time to choose services will be most likely to benefit from a smart data scheme in digital markets, as they will have the knowledge and resources to make use of what is offered. Additionally, those consumers with the financial resources to purchase ‘smart’ devices and appliances will also more able to make use of smart data-based products.

It will also be essential that there are appropriate protections in place to ensure that consumers are able to properly give and manage consent and control in such a scheme. Robust and resilient protections will be required, particularly with regard to consumers in vulnerable circumstances and the involvement of consumer representatives in the development and ongoing monitoring of these systems and processes will be important. We recommend that these systems be developed in a manner consistent with the principles of Inclusive Design. [9]

We would also welcome the government setting out details on the following:

• how digitally excluded consumers could opt-in to a smart data scheme, and following an opt-in how those consumers would manage the control element of the scheme proposed
• what research and evidence the government has gathered on whether any groups experience detriment from not having access to the scheme.

It is important that the costs of the scheme are not borne by  those not able to participate (or choosing not to participate) in the scheme.

Question 6. Do you have an initial or provisional view on the likely impacts (positive and negative) on:

• Innovation in the supply or provision of goods, services and digital content whether directly affected by a scheme or otherwise

• Competition in markets for goods, services and digital content affected by the regulations or other markets

• Business investment in the UK

• Economic growth

No comment.

Question 7. What challenges and risks should we consider when developing a digital markets smart data scheme and how can we mitigate these? This might include (but is not limited to): competition; customer exclusion; data quality or data misuse; ethical, operational or technical readiness.

As noted above, competition is a key challenge in some  digital markets.[10] We welcome the CMA’s work in improving competition and consumers outcomes in this sector.  

Regarding all consumers being able to benefit from this proposed smart data scheme, there is a key challenge regarding digitally excluded consumers, as it is estimated that 7.9 million people lack basic digital skills in the UK, with 69% of those with no basic skills having a disability or impairment.[11] There is a tangible financial impact for digitally excluded consumers, with the Centre for Social Justice estimating the costs of the poverty premium and digital exclusion to be a 25.5% difference in price between a person shopping online versus someone shopping in person or over the phone.[12]

Some consumers may be online but not have  their own devices. These consumers  may find that their data is less likely to be coherent as it may be spread across several public device access points, or across devices owned by family and friends, leaving them with a fragmented digital footprint. Some digitally excluded consumers may come online in future if their circumstances change. In those cases, their data history could still be significantly fragmented or missing. Without such a developed digital footprint, they may gain little from a smart data scheme in digital markets. We would welcome the government considering how all consumers, including those with fragmented digital footprints, could benefit from this proposed scheme.

Information security remains an issue for the UK, with 1 in 2 businesses reporting having experienced a cyber security breach or attack in the last 12 months. [13]We would welcome the government setting out how the smart data scheme safeguards might work and ensure there is consumer trust in the scheme. Additionally, data security will be crucial to consider as part of this scheme, given with the ICO has highlighted  a risk in data security incidents,[14] and a number of recent high profile data breaches in key consumer markets.

Question 8. What are the potential implementation costs to industry of introducing a digital markets Smart Data scheme? What aspects of a scheme might be most expensive to implement?

No comment.

Question 9. How can we build and maintain customer trust in a digital markets Smart Data scheme? For example, what responsibilities need to be considered for data owners and ATPs?

A significant gap for this proposed scheme appears to be in the process  to develop a consumer consent mechanism. For the energy smart data scheme, Ofgem have been developing a framework for consumer consent and control for sharing their energy data[15] and designated a body (the Retail Energy Code Company) as the delivery body.[16]

Consumer Scotland recommends that, should this scheme go ahead, DSIT examines the process and system being put in place by Ofgem and considers how an equivalent set of arrangements should be best established for digital markets. DSIT should ensure that such a consumer consent mechanism is interoperable with that for the energy smart data scheme as well as Open Banking.

Which?’s report on building trust in smart data, provides a useful overview of some of the risks of consumer harm, such as “exploitation, poor quality products and a lack of meaningful consent.”[17]

There is a risk that the availability of a smart data scheme could attract some parties who offer products to consumers for which the benefits do not justify additional costs. There may also be a risk that smart data creates unintended harm for consumers.

Building trust is about ensuring that consumers have full control over what data is shared and for what purpose; it is also critically about robust systems and protocols for vetting third parties and monitoring those organisations’ use of data.

Accountability and redress will therefore be crucial in ensuring that if things do go wrong, those responsible are held accountable and the appropriate enforcement and remedial action is undertaken timeously.

To help support consumer trust, consideration should be given to options for the involvement of consumer organisations in the design and oversight mechanisms for the scheme, as is being taken forward in the energy sector.

Question 10. What common principles are needed to support the development of a digital markets smart data scheme and why?

We would welcome DSIT considering how the design principles developed by DBT could be used to support the development of this smart data scheme.[18] Which’s trust framework could also be considered as DSIT develops its thinking on consumer engagement in such a scheme.[19]

Additionally, the consumer principles, as set out at the beginning of our consultation response, could be embedded into the development of this scheme. Ensuring these general principles are in place within the scheme could reduce the possible consumer detriment and improve consumer outcomes.

Question 11. Are there any tensions, overlaps, gaps or other features of the regulatory landscape in digital markets that the government should take into consideration?

It is currently unclear how the consumer consent mechanism will work across different regulated markets. Greater clarity is needed on how this will be developed and be suitable for all consumers to use.

Question 12. What data sharing initiatives already exist in digital markets that the government should be aware of when evaluating a Smart Data scheme in digital markets?

No comment.

Question 13. What lessons should we bear in mind from Open Banking that would be helpful to consider when developing a digital markets Smart Data scheme?

No comment.

Question 14. What lessons should the government bear in mind from the EU DMA and other Smart Data schemes in other jurisdictions including the establishment of Open Banking schemes around the world?

No comment.

Question 15. Do you have any additional comments on any aspect of developing a digital markets Smart Data scheme that has not been covered elsewhere in this call for evidence?

No comment.

Endnotes