Ministers mull trading standards revamp to improve handling of cross-boundary cases

June 22, 2011

The government has proposed the creation of a new Trading Standards Policy Board (TSPB) in a bid to improve the national leadership and coordination capability of Trading Standards and help tackle difficult cross-boundary cases.

In its consultation – Empowering and Protecting Consumers – the Department for Business, Innovation and Skills acknowledged fears that cuts to local government funding could have a disproportionate impact on cross-boundary enforcement work.

Ministers said they wanted to clarify responsibilities for dealing with cross-boundary threats, and to ensure more effective partnership working and prioritisation of activity between Trading Standards and the proposed Competition and Markets Authority (into which the Office of Fair Trading will be merged).

DBIS cited a recent National Audit Office report that concluded that £4.8bn of consumer detriment from unfair and rogue practices (or 73% of the total) arose as a result of threats that spanned more than one local authority area. However, 86% of trading standards funding is controlled by local authorities.

Under DBIS’s preferred approach:

The TSPB would be set up, made up of Chief Trading Standards Officers
A proportion of the current Office of Fair Trading enforcement budget and DBIS funding for national enforcement programmes would be combined and made available to Trading Standards through the TSPB
National and cross-boundary threats, other than those arising from structural market problems, would become the responsibility of Trading Standards
These threats could be tackled by expanded regional teams or by designated lead authorities with particular areas or sectors of expertise.
In order to reduce the disincentive for individual authorities to take on more complex or risky cases, some provision for an indemnity fund or other mechanism for underwriting risk would be needed
The TSPB would be accountable to DBIS for the way it spends national government money, but there would need to be appropriate political accountability through the Local Government Group
The CMA would have responsibility for investigating and tackling enforcement in markets in which there are structural market problems. “This would include the retention of consumer law enforcement powers as an option in these cases. The CMA would have significant discretion to determine when such structural problems exist”
The Trading Standards Institute would take on responsibility for consumer enforcement guidance, training, international liaison and policy functions, reporting to the policy board and thereby to DBIS
There would need to be arrangements for partnership between the CMA and the TSPB and also with the Citizens Advice service. “This would have to cover the sharing of intelligence on consumer detriment as well as collective decision-making on how threats which crossed over institutional divides should be handled.”

DBIS said there were a number of alternative approaches including the more radical step of giving the CMA responsibility for all cross-boundary enforcement, or giving Trading Standards responsibility for all consumer enforcement. The status quo could also be retained.

Outlining the background to the proposals, the government revealed in the consultation paper that local government funding for Trading Standards activity was expected to decline from an estimated £213m in 2009 to an estimated £140-170m in 2014.

“This will result in reduced capability in an environment where capability already varies considerably across the country,” it said. “Several authorities already have fewer than ten Trading Standards officers and have limited ability to address the larger cross-boundary threats. The risk is that enforcement activity which crosses local authority boundaries or deals with a national rather than exclusively local problem, will be disproportionately cut.”

DBIS said this in turn could have a disproportionate impact on consumers and market confidence.

The Department suggested that its funding for regional activities such as Scambusters had helped to maintain cross-border capability as had the sharing of regulatory services between different local authorities in some places.

However, it said a longer-term strategy was needed to improve the effectiveness of enforcement against national and cross-border threats.

“The interaction between Trading Standards and other enforcement authorities is also critical,” the consultation paper said. “The absence of a clear boundary between responsibilities allows some local authorities effectively to opt out of enforcement against all but the most local of threats.

“It also fails to place responsibility clearly on the national body or larger neighbouring Trading Standards teams to cover cross-boundary cases which are inadequately addressed as a result. Even the larger local Trading Standards teams and the BIS- sponsored regional teams are not always clear which cases should be passed up for the OFT to handle and which should not.”

The government also said in the consultation paper that it wanted to simplify the “consumer landscape” by concentrating public funds on Trading Standards and Citizens Advice.

“There is currently a bewildering array of public, private and voluntary bodies with overlapping responsibilities,” the consultation paper said. “Each individual organisation does a very good job and is highly regarded. But, taken together, they form a complex landscape that is difficult for consumers to understand. This duplication of effort also leads to waste and inefficiency in the use of public funds.”

Under the proposals, Citizens Advice will become – as the lead national, publicly-funded consumer advocate – the single service that consumers can turn to for information and advice. “It will also act as their champion across a range of sectors,” DBIS said. “In turn, this will help empower them to make more informed decisions about the goods and services they buy.” Consumer Focus would be abolished under the plans.

The government admitted that responsibility for advocacy in the regulated sectors posed particular challenges. It said the patchwork of bodies that exist to advocate the interests of consumers – such as Passenger Focus (for rail, bus and tram services), the Aviation Consumer Advocacy Panel (for air passenger services) and the Legal Services Consumer Panel (for legal services) – can be confusing for consumers and meant that capability was fragmented.

DBIS said it would consult on options to simplify and increase the impact of sectoral advocacy by integrating the functions of various bodies into a single regulated industries unit. It will also consult on whether it is possible for Citizens Advice to take on functions from Consumer Focus and other sectoral consumer bodies.

The government said its reforms were guided by three objectives: to reduce the complexity of the consumer landscape; to strengthen the effectiveness of consumer enforcement; and to ensure more cost-efficient delivery, “closer to the consumer front line”.

Consumer Minister Edward Davey said: “This government believes in giving more power to people. Our consumer policy is all about empowering consumers to make the right decisions for themselves when they buy goods and services.

“But we also need to ensure we have the right system of help, advice and protection when consumers need support. For too long people have been faced with a confusing landscape of different, public, private and voluntary consumer bodies, with overlapping roles and responsibilities. It is not always clear where to turn for trusted advice and information which consumers need to make good choices or a champion to support them when they have been ripped off.”

Davey claimed the government’s proposals would put an end to this confusion and “make sure consumers are empowered and have champions”.

He added: “The Citizens Advice service has for a long time offered trusted advice, information and advocacy. So it’s right that it sits at the heart of our plans.

“Likewise, Trading Standards are trusted by the public to do a good job in enforcing consumer law and standing up for consumers. But there are barriers which get in the way of effective responses to rogues who operate across authority boundaries. Our proposed reforms will strengthen their hand in tackling these threats to consumers.”

The consultation runs until the end of September. It can be viewed here.

Philip Hoult