Advantages And Disadvantages Of Codes Of Practice
The United Kingdom Does not specifically have a single body of legislation. However it is divided into three legal powers. Each one of them has its own law and legal system. These three jurisdictions include England and Wales (English law), Scotland (Scots law), Northern Island (Northern Ireland law). The main stakeholders include the legislators, the consumers, the manufacturers and retailers, the regulatory agencies and analysts. From 1977 to up till now many laws has been passed in order to improve the codes of practice. In order to make the laws workable and successful both the government and the retailers should work in consensus with each other. Hence, the stakeholders of UK have worked hard in order to make these laws workable. This research focuses on who exactly these stakeholders are and to what extent these laws have proved to be successful.
The stakeholders involved in the process of developing legislation
The main stakeholders involved in making the legislation are the legislators, the consumers, the manufacturers and retailers, the regulatory agencies and analysts. The legislators require mandatory information to inform consumer, facilitate trade and to prevent dupery. The consumers need information to provide identity and quantity, to advice on safe storage and use and also to enable informed choice. The manufacturers and retailers need information to help differentiate / sell the product, comply with legislation and enable traceability of products. The retailers additionally provide space for the bar code for checking out the scanning and they stock control via in-store database. In the end regulatory agencies and analysts need data in order to check whether regulatory standards are fulfilled and labelling regulations are complied with claims are also fulfilled.
“Government has two main channels through which to influence retailers: direct action and indirect action, via influencing consumers to demand improved sustainable practices from supermarkets (see Figure below). In terms of direct action, stakeholders believe that a mix of encouragement and enforcement will be most effective.
How Government can influence retailers
Mix of encouragement
Encourage consumers to think about sustainability
Issues leading to indirect pressure on markets"
(Opinion leader (2007) Supermarket Thematic Review: Stakeholder Consultation Report)
All the acts and laws are been enforced by the enforcement authority. All the authorities in England, Wales and Scotland and every Northern Ireland district council has a obligation to enforce, as an enforcement authority is obliged to see the safety provisions in addition to the law on misleading price indications though these duties are delegated by the Secretary of State. Enforcement authorities have the power to make test purchases and have powers of entry and search. Further, a customs officer can detain goods. There are criminal offences of obstructing an officer of an enforcement authority or giving false information, punishable with a fine and recovery of the costs of enforcement.
The relationship of a consumer and retailer
Customers or Clients and the manufacturers or supplies of the goods and services, have a healthy long term relationship which is unavoidable. On the part of the organization, customer care or client care is the most important aspect of an organization’s operation. Clients or customers will opt for a particular product or service, even if it is more expensive than the competition, because of the assurance that they receive from the front-line service personnel.
Consumer laws in UK
The United Kingdom is a member state if European Union, hence it is bound to follow the consumer protection directives of the EU. Domestic (UK) laws were originated within the ambit of contract and tort but, with the influence of EU law, it is emerging as an independent area of law. Consumer Protection law comes into action when complaints are made to the Director-General of Fair Trade. The Office of Fair Trading will then investigates, then either impose an injunction or take the matter to litigation.
The Office of Fair Trading also acts as the UK's official consumer and competition watchdog, with a remit to make markets work well for consumers, and at a local, municipal level by Trading Standards departments. General consumer advice can be obtained from Consumer Direct or via a local branch of the Citizen's Advice Bureau.
“It is clear that each country’s political and legal traditions have played a key role in shaping its consumer policy. There is much greater diversity than in the area of competition policy. Consumer rights have evolved over centuries in terms of basic law for example weights and measures which evolved from guild rules and markings (hallmarks) in medieval times in Europe. In the UK, common law principles relating to the sale of goods were first codified in the Sale of Goods Act 1893, and re-enactments of that Act still form a mainstay of consumer protection today. However, most of the key modern consumer laws in the countries studied date back around 30 to 40 years."
(Sutcliffe G. (Oct 2003) Comparative Report on Consumer Policy Regimes pg 8)
These Consumer laws include
Unfair Contract Terms Act 1977
Sale of Goods Act 1979
Consumer Protection Act 1987
Unfair Terms in Consumer Contracts Regulations 1999
Consumer Protection (Distance Selling) Regulations 2000
Electronic Commerce Regulations 2002
Enterprise Act 2002
General Product Safety Regulations 2005
Consumer Protection from Unfair Trading Regulations 2008
The Consumer Product Safety Act gives the Consumer Product Safety Commission the power to develop safety standards and pursue recalls for products. The Federal Trade Commission Act created the Federal Trade Commission (FTC) to prevent unfair competition, deceptive acts, regulate trade, etc. Food & Drug law states that pure Food and Drug Act which led to the creation of the U.S. Food and Drug Administration (FDA) to regulate foods, drugs, and more. Real Estate law states that Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks and enforces the lenders to provide a good faithful estimate of the costs. Health Insurance Portability and Accountability Act (HIPAA) provides consumer protection for appropriate health information. The Digital Millennium Copyright Act prohibits production or sale of devices or services intended to circumvent copyright measures. Digital Media Consumers' Rights annul the Digital Millennium Copyright Act.
The Federal Trade Commission, the nation's consumer protection agency, collects complaints about companies, business practices, identity theft, and episodes of violence in the media and hence it’s quite active as a result the media s now more careful.
There is law that within six months, beginning at the time at which the goods were delivered, the buyer can require the seller to repair the goods, reduce the price, or rescind (retesting property and requiring the return of any payment) the contract where the buyer successfully claims that the goods were not in accordance with the contract at the time of delivery. The seller can defeat this claim if either it is established that the goods did so conform at the time of delivery, or the measure is incompatible to the nature of the goods or the nature of the lack of conformity. Hence, this law provides security to both the consumer and retailer.
Section 10 originally imposed a general safety requirement on consumer products but this was repealed when its effect was superseded by the broader requirements of the General Product Safety Regulations 2005. Section 11 gives the Secretary of State, as of 2008[update] the Secretary of State for Business, Enterprise and Regulatory Reform, the power to make, after consultation, regulations by way of Statutory Instrument to ensure that the goods available are safe, unsafe goods, or those goods which would be unsafe in the hands of certain persons, are not made available to persons generally keeping their health in mind and finally only appropriate information is to be provided in relation to goods in order to avoid manipulation with the customers.
The Consumer Protection from Unfair Trading Regulations 2008 is a legal instrument in the United Kingdom, made under the European Communities Act 1972. It was made applicable on 26 May 2008. These regulations introduced new rules about consumer protection and their responsibility of businesses in order to trade fairly. It places a general duty on traders not to trade unfairly. The regulations also include a blacklist of 31 banned trading practices.
Trades Descriptions Act 1968 is about how goods are described. If it says ‘polishes black’ then it must, in fact, polish blacker than black or the business can be prosecuted. As a result this law made a binding on the seller to give appropriate information otherwise the company can be put on trial.
Food Safety Act 1990 forces food businesses to make sure food is safe to eat and does not cause any health problems. Food Labelling Regulations 1996 states that Businesses must tell consumers exactly what is in food so that the consumers can have the exact information about their diet.
Sale & Supply of Goods Act 1994 brings the Sales of Goods Act (goods) and the Sale of Goods and Services Act (services) together into one law. It also adds the right of rejection and refund to the buyer if products are not satisfactory
Consumer requires reduction or rescission. This is only available where repair or replacement is impossible or the seller is taking an unreasonable amount of time to perform these requirements. Any reimbursement must take into account any use that the buyer has had out of the goods.
(Opinion leader (2007) Supermarket Thematic Review: Stakeholder Consultation Report pg 33)
Whenever there is a discussion about the market, there is an important issue. On one hand, consumers need some degree of protection regarding their goods. On the other hand, all these laws and regulations add to business costs. Consumer protection regulation can add the following to business costs; the costs of reading, understanding and complying with the laws that is the time and money, the costs of employing specialists to deal with the laws and their consequences, the costs of changing business practices e.g. re-training sales staff or re-designing labeling and packaging, the costs of dealing with complaints, especially if they end up in the courts. Then there are the costs of fines, the costs of a damaged reputation and image with customers. These costs are especially difficult for small businesses which lack the time, money and expertise to deal with it all. New small businesses might become sometimes become the big businesses of the future; growth and employment depend on new business start-ups. If entrepreneurs are discouraged by too many regulations and don’t start new businesses then future growth and employment may suffer badly.
There is an argue going on that at least all UK businesses face the same costs, whatever they might be. But many UK businesses are also in competition with foreign businesses, either in the UK market for imports or in the world market for exports. So higher costs of goods can damage UK competitiveness, and this can damage growth and employment. This is one reason why the EU sets common standards for all EU businesses, so competition is fair and equal among all companies that come under EU acts. However, this doesn’t cover other countries such as the US and Japan. So the government has to strike a very careful balance between protecting consumers and not burdening business with too many costs.
The key criticisms stakeholders (both retailers and non retailers) have of Government policy to date are that it has perceived lack of long term vision which is crucial if business is to make financial investment in change. There is a lack of joined up strategy and a framework and also there are seen to be many initiatives but they have no common objective and similarly there are plenty of targets but they lack the necessary detail behind them.
“Conflicting views from different Government departments (e.g. DIFID and Defra) – resulting in a lack of consistency. Generally, Government is seen by non-retail stakeholders to have little clout when it comes to influencing markets, or at least Government is seen to be reluctant to make demands on businesses which are part of a healthy economy. Retailers themselves, see little in the way of guidance or incentives to further encourage them to move towards a more sustainable food chain (and claim to be doing more than demanded of them by Government at present)HideWikipedia is getting a new lookHelp us find bugs and complete user interface translations . Many commentators feel Government has played little or no role and, in general, lobby groups feel it would be appropriate for Government to play a significant part in pressurizing or encouraging more positive movement from retailers. "
(Opinion leader (2007) Supermarket Thematic Review: Stakeholder Consultation Report pg 36)
Consumer protections limit the do and don’t of business as a result it adds to business costs. Businesses should be more careful and should avoid making dangerous products, they will need to spend time and money understanding all the rules and regulations, and they may end up in court with expensive lawyers and facing a large fine. This also results in increasing complexity. Products today are simply much more complex than they used to be, and it is unreasonable to expect consumers to really understand everything they buy.
Unsolicited Goods Act 1971 stops you having to pay for goods that are sent to you even though you didn’t ask for them. Consumer Credit Act 1974 states that selling goods on credit (HP, loans, deferred payment) can be complicated, and this law makes sellers tell buyers clearly what is involved, especially the true cost of repayment (APR) which it is easy to disguise with clever calculations. As a result, the consumers buy the products at increased prices without knowing it.
“The team found that the UK was amongst the best in terms of:
_ consumer rights in regard to sale of goods and services;
_ small claims court procedures;
_ maintaining Product Safety;
_ provision of consumer advice;
_ strength of consumer advocacy at policy making level and sponsoring
advocacy;_ investigating markets that are not working well for consumers."
Opinion leader (2007) Supermarket Thematic Review: Stakeholder Consultation Report pg 33
It has been identified that five significant recent developments in which the State, Corporate and private interests, consumers and social interest groups build relationships in response to the need for accountability within the market. This represents the development of a more complex public/private set of relationships which is in fact a third phase of regulation which now embodies new public institutions (like the EFSA and the UK FSA) and results in a greater competition to win the ‘battle’ over the hearts and minds of consumers. The results of the research shows that first there is indeed a significant trend towards Europeanization of the market policies in the UK. Secondly, there is a growing commitment of these policies and the related authorization of a different set of interest groups when specific issues are concerned. Thirdly, private interest groups most particularly retailers which are the major stake holders are increasingly playing a major role in shaping the UK consumer policy. Nevertheless, there was agreement on issues of common interest, and there is a more flexible and participatory relationship between the private interest, policy and regulatory interest and consumer and social interest groups. The emerging model of business regulation may have begun to lay a foundation for a more, all-inclusive and business-led regulatory system based on appeasing consumer and private sector apprehensions. It came out very strongly in the research that retailers, in the name of the consumer and public interest, are more influential, in policy- making in the UK, partly as a result of their knowledge of and authority over the constructions of the consumer interest. At present the Confederation of British Industry (CBI, which acts on behalf of all UK business) is complaining vigorously that the Labour government has added a huge number of new regulations that are not only concerned with the consumer protection and this is detrimental to UK business. They want the government to cut down on this. Indemnity clauses, a party that deals as a consumer cannot contract to compensate a third party on behalf of the other party, except insofar as it satisfies the requirement of reasonableness.
“wide reaching legislation: The UK does not have the equivalent of a
general duty to trade fairly. This can act successfully as a backstop given
the inflexibility of piecemeal legislation and ease of public
comprehension of a simply worded basic right as in Australia and the US."
(Opinion leader (2007) Supermarket Thematic Review: Stakeholder Consultation Report pg 33)