towards more effective consumer market-place interventions — a model for the improvement of o.f.t....

William Richardson and David Morris Towards More Effective Consumer Market- Place Interventions - - A Model for the Improvement of O.F.T. Codes of Practice

ABSTRACT. In the U.K., the Office of Fair Trading (O.F.T.) is required to encourage trade associations to prepare and disseminate codes of practice for the enhancement of trading practices. In this paper the authors put forward a model of prerequisites for O.F.T. Code effectiveness. The model is then used to investigate and develop insight into the effectiveness of codes already in existence and to explain the successes and failures of these market-place interventions. Finally, the potential impact of the proposed general duty to trade fairly is considered in the context of the model.

In an era when parties from all sides of the consumer regulatory debate agree over the need to ensure that legislative interventions are both effective and efficient there exists an associated need for greater sophistication in decision making over regulatory problems. Repeat- edly, parties argue the case for careful cost/benefit analysis to precede the introduction of legislation (Borrie, 1983; C. B. I., 1981) and a call has been made for the development of a model which can be useful as an analytical and evaluative framework for the testing of the effectiveness and efficiency achieved, or likely to be achieved, by existing and/or potential government legislative strategies (Ramsay, 1984, 1985). Such a model might thus prove helpful to decision makers involved in the debate on consumerism in their attempts to (a) explain the successes and failures of existing legislative interventions, (b) decide the most appropriate future strategies for dealing with existing or new market-place problems, and (c) design the most appropriate form(s) for the strategy(s) selected as market-place change agents.

This article seeks to contribute to this decision making need by: 1. presenting a model for the prerequisites of effective perform-

ance by trade association codes of practice 2. using this model to present some analysis, evaluation, and

insight, stimulated by the model, regarding the performance of the Office of Fair Trading (O.F.T.) Codes of Practice (prepared under Section 124(3) of the Fair Trading Act 1973)

Journal of Consumer Policy 11 (1988) 315--334. © 1988 by KluwerAcademic Publishers.

316 William Richardson and David Morris

3. considering briefly, in the context of the model, the potential impact on code effectiveness of the proposed duty to trade fairly.

A MODEL FOR USE BY CODE OF PRACTICE DECISION MAKERS

The following model is made up of those prerequisites which we have identified as giving rise to effective and efficient codes of practice in action, i.e., after the political bargaining, drafting, and parliamentary processing activities and costs have been undertaken and incurred. We do not concern ourselves in this article with the important "political brokerage" process of developing codes. The model is born from a synthesis of experiences and materials including:

- - the writings of others working in this area (e.g., Maynes, 1979; Mitchell, 1978; National Consumer Council, 1986; Pickering & Cousins, 1982, 1983; Stern, 1971; Woodroffe, 1984);

- - a review of research findings on the successes and failures of O.F.T. Codes published by bodies such as the Office of Fair Trading, Consumers' Association, and various Trading Standards Enforce- ment organisations (see appendix to National Consumer Council, 1986);

- - u n s t r u c t u r e d interviews with consumerism experts around themes raised by earlier versions of the model;

-- practical experience from working with codes of practice (one of the authors worked for some years as Consumer Affairs Officer for South Yorkshire County Council);

- - reiterative induction processes stimulated by the above activities and experiences.

Our model for code effectiveness comprises the following inter- active, essential prerequisites:

1. Content of codes which must be pertinent to market-place problems and inherently capable of providing solutions.

2. Coverage of the industry concerned, i.e., there must be partici- pation in the code system by an effective majority of the firms in that industry.

3. Commitment by participants towards the practical application of code provisions.

Secondary forces working towards increased code effectiveness include:

4. Consumer awareness of code provisions and rights (under the code and generally).

O.F.T. Codes of Practice

Content Coverage

Conciliation and Arbitration S y s t e m s ' ~ CODE ~ f - ' ~

EFFECTIVENESS

J Communications

Capabi 1 i ty

in Enforcement

Fig. 1. The seven "C's" of code effectiveness.

317

Commitment

Consumer

Awareness

5. Conciliation and arbitration systems to assist the resolution of disputes between customer and trader.

6. Communication systems and campaigns designed to enhance awareness of all parties affected by codes and particularly customers and retail traders.

7. Capability of the trade association concerned to enforce compliance by its member firms.

We will now examine the positions and problems of O.F.T. Codes of Practice against the backcloth of each of these effectiveness

stimulators.

APPLICATION OF THE MODEL TO O.F.T. CODES OF PRACTICE

PERFORMANCE

Code Content

What goes into codes is of fundamental importance to their eventual success. If the provisions are insufficiently comprehensive then a code will be inherently inadequate. Any failure to apply those guidelines which are set out will only add to this basic deficiency. Conversely, if rules are too stringent total market efficiency might suffer due to a reduction in the supply of low-quality, hence low- priced goods and services. Furthermore, overstringency is likely to stimulate a failure to comply. Humble (1984) stated: "What is in the Codes represents the best that could be written at the time. The O.F.T. never conceded any issue." Certainly, the O.F.T.'s early


decision to take personal responsibility for the production of codes (the very first one was produced on behalf of the Office by an outside body) and the evidence of negotiation breakdowns due to trade associations' reluctance to meet O.F.T. demands on content, indicate that the Office is not prepared to sell the consumer short.

At the same time, complaints from some quarters claim that codes "do not go far enough" and that codes are "only a bare statement of legal rights, anyway." Hamilton & Whinnett (1987), for example, suggest that the drafting process adapted for O.F.T. Codes (whereby consumer interests are taken into account only after the trade has substantially drafted its own code) means that the Codes are protec- tive of prevailing market practices and unlikely to contain innovative consumer protection provisions (p. 191). Such claims support our contention that the Codes are not, generally, overstringent. Most provisions provide direct and simple guidelines to help ensure that basic, but often neglected, standards are maintained. Often what is in a Code is used by the O.F.T. as a springboard to exert pressure towards further improvements.

Further, the Codes can cover areas which are generally held to be legislatively difficult. Tench (1984), for example, cites spare parts availability provisions as as a case in point.

Whilst feeling that little could be done, at least in the short term, about the quality of goods and services, the O.F.T. has always maintained that something could be done about the handling of complaints, the provision of clearer information, and the abandon- ment of unfair trading practices. The Office now tries to ensure that all Codes deal with all aspects of the supply of products (advertising, product and price information, delivery dates, accessories, etc.) and of after-sales service (availability of repair services, reasonable time for repairs, estimates, guarantees, and spare parts availability).

To mention a few examples, the Furniture Code is particularly keen to ensure that all advertising is clear and honest, that full information is given about goods, prices charged, and credit facilities, and that assistance and advice is easily available on the general cleaning and care of goods. The Mail Order Publishers Code covers practices such as prize draws and competitions and the sending of unsolicited goods. Both the Laundry and Dry Cleaners Association and the Association of British Travel Agents (A.B.T.A.) Codes contain provisions designed to eradicate unreasonable or unfair exclu- sion notices or contractual clauses. The A.B.T.A. and the Glass and

O.F.T. Codes of Practice 319

Glazing Federation Codes provide for financial help to customers who suffer when member organisations cease trading, disappear, or become insolvent.

The O.F.T. further seeks to incorporate into each Code a four-step complaints procedure, i.e.:

Stage 1. Referring the consumer to the supplier or seller. Stage 2. If no satisfactory solution is reached, the consumer may

seek advice/help from a local Trading Standards Depart- ment or Consumer Advice Centre.

Stage 3. Conciliation should, if necessary, be provided by the Trade Association. The Trade Association is also encouraged to provide testing facilities.

Stage 4. An independent, legally binding solution either through the County Court or through arbitration using the Institute of Arbitration.

The Quality Problem

Despite general approval of code content, a major omission is apparent. The short term (Humble, 1978, p. 145) is developing into the long term as far as quality of goods and services is concerned. Codes, in general, still pay little attention to the inherent quality of goods and services provided by member firms and yet consistently, most consumer problems and complaints are generated because of quality shortcomings in goods and services. Quality or the lack of it, endures as the greatest source of customer dissatisfaction. Tables I and II illustrate this fact.

TABLE I Consumer Complaints by Trading Practices

Problem area

1980

Number of complaints

1981 1985/6

1. Merchantable quality 125115 129 337 142556 2. Lack of information 37 976 48703 74 755 3. Unreasonable restrictions 30501 38786 37473 4. Price problems 30303 27021 29602 5. Delivery problems 26 602 24551 30 966

Derived from O.F.T. complaints statistics. Source: Various issues of O.F.T. Bee Line.


TABLE II New and Second Hand Motor Cars and Motor Cycles - - The Major Complaint

Generator -- 1984

Total of "merchantable Merchantable quality complaints Amalgamation of next quality" complaints in arising within first 3 months highest complaint the year after purchase categories

2959 2264 1833

Source: Complaint statistics supplied to the authors by South Yorkshire, West Yorkshire, and Cleveland County Councils and by Lambeth Council.

Much recent research (National Consumer Council, 1984; O.F.T., 1985; Ramsay, 1984) provide further evidence about the relevance of product/service quality and support Sir Gordon Borrie's assertion that "there is no room for complacency in shops, stores, the service industries and the quality control departments of manufacturing industry" (O.F.T., 1985). However, despite the great importance of improved quality performance to consumer satisfaction and to the nation's economic and social well-being (McRobb, 1984; Mortiboys, 1983), Codes remain largely orientated towards cure rather than prevention.

Expert opinion and various reports have much to say on this omission of quality.

Cars. A 1981 O.F.T. report claimed 58% of new cars surveyed needed warranty repairs~ A 1981 Consumers' Association report on car servicing observes that "astonishingly, nowhere does the Code talk about quality and standard of workmanship."

Shoes. The Shoe and Allied Trades Research Association has estimated that £40 millions worth of unsuitable or faulty shoes are sold every year. Adamson (1984), who has emphasised quality control in the Timpson Organisation Shoe Code feels that generally, "codes don't take standards far enough." A 1983 report by the Cleveland Trading Standards Department is critical of the standard of fitting service provided by many shoe shops and claims that the broad reference to trained fitters in the Shoe Industry Code must be redrafted in more specific terms.

Furniture. A 1983 "Three piece suite" report by South Yorkshire County Council highlights the quality problems inherent in this sector of the furniture industry, particularly at the cheaper end of the market. Taylor (1984) confirms that in the £299--£399 suite range


"you might as well send a repair man out with each order." The Furniture Code, however, does not cover product quality.

General. Many of the experts we have talked to tend to agree with Gascoigne's (1984) assertion that "it is really second best to have repairs from the manufacturer, quality should be there, initially," and with Cressey (1984) who felt that Codes pay too little attention to technical matters covering product characteristics and "generally are not geared up to get to the root of the problem -- quality."

Investigations of O.F.T. Codes under the heading of content, therefore, suggest that while the Office is to be congratulated -- along with its trade association counterparts -- for the pertinent and useful provisions drafted into existing Codes, a glaring omission from most Codes is the absence of product/service quality control guidelines. The massive adverse economic and social effects of British industrial quality failure makes this area well overdue for the creative attention of Code drafters.

COVERAGE OF INDUSTRY FIRMS

The Appendix shows that while Code members' sales generally account for the majority of industry sales nevertheless, even in the most widely covered industry a sector generating 10% of industry sales does not subscribe to the relevant trade association.

The major problem here is outlined by Grose (1984), in a comment on self-regulation as an alternative to statutory regulation: "A great weakness has been the threat to support for Code imple- mentation created by outsiders who adopt lower standards while competing strongly on price." Gascoigne (1984) asserts that "outsiders continue to stimulate legislative demands, despite the self-regulatory attempts of a major portion of the industry." Pickering and Cousins (1982, 1983) refer to "free riding" traders who provide lower standards while taking advantage of the higher industrial image created by Codes. Problems over lost deposits made by customers of non-association traders have stimulated demands for a general legislative fund to protect customers in bankruptcy or fraud situa- tions -- despite the existence of such protection within the Associa- tion of British Travel Agents, Glass and Glazing, and Newspaper and Periodical Publishers' trade associations (O.F.T., 1986b; South York- shire County Council, 1983).

The evidence suggests, therefore, that comprehensive coverage of

3 2 2 William Richardson and David Morris

the industry is a prerequisite for O.F.T. Code success not presently being met.

COMMITMENT OF PARTICIPANT FIRMS

The essence of any form of self-regulation is the voluntary nature of compliance to its guidelines. While some members do apply their Code provisions willingly, the following examples show clearly that willing commitment, from all participants, to all the provisions of the respective Codes is not present.

Electrical Codes. According to O.F.T. monitoring in 1980: "Standards are largely but still not invariably being met by Code members."

Launderers and Cleaners Code. According to O.F.T. monitoring in 1981, "the proportion of members displaying Code of Practice statements to indicate their commitment to the Code has fallen."

Footwear Code. According to a Cleveland Trading Standards Department survey in 1983, it is clear that "the Code of Practice is not being complied with by all retailers subscribing to it."

Motor Agents Codes. According to a Consumers' Association survey in 1981, "despite the introduction of Codes of Practice in 1976 we are forced to the conclusions that you are no more likely to get a decent service for your car today than you were 10 years ago." A motor trade executive commented to us in 1983: "It is a sad fact that far too many of our members do not realise the commercial advantage of displaying the M.A.A. sign on their premises." Accord- ing to an O.F.T. survey (O.F.T., 1985), "only 40% of member firms surveyed offered customers the predelivery check sheet information and no complaining customers had been advised of their right to refer to the trade association conciliation service."

Organisation attitudes to Codes of Practice and to customers vary substantially within the same industry. We have seen committed applications of Code provisions and undoubtedly some organisations trade to standards higher than those contained in the Codes (Adamson, 1982). Conversely, however, many consumer advisers remain in complete agreement with Shanks' (1982) assertion that "In too many cases there is a love-hate relationship between the enter- prise and its customers. The customer is loved when he buys and hated when he complains or demands changes."


The problem in the majority of cases, however, is not one of an inherent malevolence towards customers nor of fear of the costs of compliance. It is more one of organisations failing to sense the opportunities which are available from a more proactive stance to customers -- and the assistance codes can offer such a stance. Adamson (1984) sums up a general feeling in stating that "too many regard the Code as an exercise in trade PR and not something which means anything to them." A small motor agent and a marketing executive of a large furniture and electrical group, respectively, seemed to confirm the validity of this opinion when they told us: "To be honest I've never actually read one. It's really just a gimmick for customers. It gives us more standing," and "I have seen them but I'd forgotten about them. I must admit that I haven't looked at them for some time."

Many organisations, therefore, pay lip service to but do not act positively on Code matters. Apathy, hostility, and concern over potential adverse competitive costs lie behind this lack of committed compliance.

CONSUMER AWARENESS

The customer is the important party to Codes of Practice. Given less than comprehensive coverage and commitment from the trade, it is he/she who has to know about them and who has to react, in the market-place, to the advantages they offer. Of course, in the perfect world of the classical economist the consumer is sovereign: He/she dictates whether further organisational measures are required to improve trading standards via purchase decisions. Perfectly competitive conditions, however, presuppose "global rationality" (Cyert & March, 1963) on the part of all market players. The consumer is expected to know all and to understand all. Consistently, however, this precondition has been found not to apply. Opinions and findings that consumers do not know many of their basic legal rights (see, for example, Maynes, 1979; National Consumer Council, 1979; O.F.T., 1985) are reflected in similar findings from research into consumer awareness of Codes of Practice. The customer, consistently, has been seen to be ignorant of Code of Practice matters, as the following examples of research findings clearly indicate.

In 1977, O.F.T. research found that in response to the question


"Could you tell me what the term 'Code of Practice' means to you?," 25% of respondents answered "means nothing/don't know." In 1978, an O.F.T. survey of the Motor Agents Association Code found "37% awareness of public." In an O.F.T. survey on the Footwear Code in 1978, it was found that "only 7 out of 50 respondents showed any degree of recognition." A 1983 survey of South Yorkshire shoppers (W. Richardson, 1984a) found that in response to the question "In the shopping situation, what do you understand by Codes of Prac- tice?," 76% of respondents replied "Nothing," "Not a lot," "Don't really know," "Never heard of it," etc. The O.F.T. 1985 survey of the Vehicle Body Repairers Code concluded that the Code "needs much greater publicity." The O.F.T. 1986 review of the Mail Order Protec- tion Code found that "awareness of the scheme amongst consumers is low."

Consumer awareness must precede consumer responsiveness. The evidence shows that such awareness is at a low level. Communication of Code provisions is either not reaching customer level or is not being picked up/acted upon by consumers.

CONCILIATION SYSTEMS

We have seen that Codes of Practice have been prevention rather than cure orientated and it is logical, therefore, that the O.F.T. should show great commitment .to the incorporation within Codes of an effective redress system. All Codes offer a three or four stage redress procedure as previously described. However, the pertinence of Stages Three and Four (conciliation and arbitration) within Codes of Prac- tice remains an issue of dispute.

The O.F.T. remains convinced of the need for Code arbitration systems as an alternative to recourse to the County Court and seeks to promote a system using the Institute of Arbitrators which aims to provide a cheaper, quicker, and more flexible system of complaint resolution and consumer redress. However, many parties question the pertinence of Code redress systems given the existing system. Gascoigne (1984), for example, questions the basic assumption of the need for an alternative to the courts. "Raise the County Court small claims limit and make the County Court system work better. Arbitra- tion forfeits the right to County Court action but I'm not sure that the Codes' arbitration system works well. I'm particularly concerned


about the 'papers only' arbitration. A fundamental problem for the consumer is his/her inability to set out his/her case well. 'Papers only' cheapens the procedure but it affects justice. In my opinion it is much simpler and easier to take your case to the Registrar at the County Court and to discuss it 'around the table.' Most consumers around here have great difficulty putting pen to paper in effective fashion."

Consumer advisors, operating at the "raw end" of consumer disputes seek help where they can best find it and so are particularly concerned with how well Code conciliation and arbitration systems are working. Hinchliffe (1984) states: "Personally, I'd rather a holiday complaint goes through A.B.T.A. than through the courts, although I'm not so sure about some of the other Association systems." R. Richardson (1984) is critical of the Motor Agents Association conciliation system: "I've phoned them twice recently on different matters and they haven't been at all helpful." Blake (1984) says: "N.A.R.F. (Furniture Code) recently advised acceptance of a retailer's offer without any examination of the allegedly faulty furniture. The customer wanted to know how they could do this."

Code of Practice redress systems attract a variety of attitudes and opinions. From this mixed reception the following observations can be drawn:

- - There is fundamental disagreement between the O.F.T. and some parties on the question of whether redress procedures should be incorporated within Codes. Improved County Court systems are often seen as a better alternative.

-- The inclusion of Stage Four arbitration procedures creates the greatest source of disagreement. Conciliation systems incorporating independent testing services are viewed more favourably.

-- The use of "papers only" arbitration is criticised because of a perceived adverse effect on justice for the customer.

-- Some Code redress procedures are more efficient than others; some are generally good, some are generally bad.

-- Trade association involvement in consumer disputes will keep associations "tuned in" to the problem areas of their industries.

The debate on Code redress procedures seems likely to endure. However, given the obvious commitment to conciliation and arbitration systems within the Code systems demonstrated by the O.F.T. and the participant trade associations, and accepting the attractive- ness of a comprehensive self-regulatory system -- one which provides both prevention and cure guidelines -- we would suggest that it is


time for all parties, including the critics, to accept these established systems (more than 2,000 cases have already been settled under Code arbitration) and to channel efforts towards making the procedures more useful and efficient.

COMMUNICATIONS

The O.F.T. and the trade associations draw up, introduce, promote, and advise on the Codes. This deep involvement stimulates commitment and produces familiarity with Code provisions and a desire to see these being successfully implemented. However, most member firms are remote from their association secretariats and management committees and this remoteness, together with organisational apathy and/or worries about potential adverse competitive positions, means that Code founders often fail to pass on their passion and commitment for Codes to the grass roots membership. Often the very basic requirement that retail staff are conversant with Code content is not fulfilled.

Many retailers are simply not aware of their Code obligations. The O.F.T. survey of 1978 found that "32% of the Motor Agents Association retailers make no effort to inform staff of their Code." The Cleveland County Council 1982 survey claimed that "staff were often unsure whether they were Footwear Distribution Federation members or not, or if they adhered to the Code." Random checks on customer contact staff of ten different Code retailers, carried out by ourselves, showed that two respondents, from the motor and furniture trade, respectively, displayed negligible awareness of their respective Codes.

The "ideal" market situation would have consumer pressure for change "shaking out" apathy and pushing organisations into the responsiveness which would be necessary for survival and growth. We have already seen that consumers remain unaware of, or un- responsive to, the help available from Codes and Code participating firms. Code publicity campaigns have been undertaken in the past and results have not been so useful as was hoped. Difficulties in designing and implementing effective promotion campaigns are apparent (Moss & Richardson, 1984). Nevertheless, there are obvious shortcomings in the communication systems presently being used between the trade association, the member firm, and the consumer.


More recent Code monitorings have again produced calls for "publicity to increase public awareness" (O.F.T., 1986).

CAPABILITY OF TRADE ASSOCIATIONS TO ENFORCE CODE

COMPLIANCE

Krum & Greenhill (1977) argue that trade associfitions must adopt the following enforcement procedures in an attempt to ensure code compliance from members:

1. Acceptance of code practice must be a condition of trade association membership.

2. A procedure for monitoring the adherence to code provisions must be established.

3. An investigative and judicial procedure for handling alleged code violations must be introduced.

4. A system of penalties for guilty firms must be adopted. We would add two further important ingredients to the above

effective enforcement characteristics list: 5. Membership of the trade association should be a major

economic benefit. 6. Sanctions imposed for code violations should be meaningful. While trade associations generally fulfill the requirements of (2)

and (3) above, some (for example, the Footwear Association and the Association of Manufacturers of Domestic Electrical Appliances) do not make O.F.T. Code adherence mandatory. Many also appear reluctant to fine or expel members. These shortcomings reflect the realisation that the ultimate sanction -- expulsion -- is not such a strong deterrent in many cases. Members of many associations could still operate successfully outside their association. Additionally, it can be argued that expulsion further distances the very traders who are most in need of association influence. Generally speaking, the Code trade associations have influence but little power and use persuasion rather than more stringent sanctions in dealing with members.

The experts we have interviewed certainly point to this lack of effective power as the major reason why trade associations do not command greater commitment to the O.F.T. Codes from their members. Stakes (1984) remarked: "In a competitive industry like ours (credit brokerage) it is sometimes like talking to a brick wall trying to get members to comply with our advertisement provisions.


If finance companies threatened to stop their finance sources then members would have to comply. As it is we would welcome some effective legislation." Gascoigue (1984) felt that "in many of the industries, expulsion from the relevant trade associations doesn't really affect the organisation's trading position." Prentice (1984) stated: "Many association members don't care if they're thrown out. The public does not know who is in the associations anyway." Also the Director General (O.F.T., 1982) acknowledges this problem: "Codes have two principal weaknesses. They cannot be enforced at all against non members and they are difficult to enforce even against members."

The most effective Code enforcers (and the most effective Codes) are recognised as being the Association of British Travel Agents and the Advertising Standards Authority. More than in any other Code, failures to comply with the provisions of these Codes can result in real and significant economic sanctions being applied. It might be, therefore, that the capability of enforcement, through economic "muscle," is the most important characteristic in the determination of code effectiveness.

CHANGES REQUIRED TO ENHANCE CODE OF PRACTICE

EFFECTIVENESS AND THE POTENTIAL IMPACT ON CODE

PEFORMANCE OF THE PROPOSED GENERAL DUTY TO TRADE

FAIRLY

Our investigation undertaken in the context of our model for code effectiveness indicates that O.F.T. Codes are effective market-place regulators (taken en masse). They have produced economic and social benefits in excess of the costs involved; Pickering & Cousins (1982, 1983) reached a similar conclusion. As well as generating specific problem area improvements, Code activities have helped to raise trading standards more generally, market wide.

However, informed opinion seems to agree that codes can play a much more significant part in the effective regulation of the consumer market-place. Our own research, too, suggests that O.F.T. Codes of Practice are in need of new impetus. Our model-based discussion in this article indicates the need to make a number of amendments to improve Code performance. Content amendments are required to provide effective quality control guidelines. The levels of industry


coverage, trade membership commitment, and consumer awareness also need to be raised. Code communication systems and capability of trade association enforcement, however, do not generally appear to be up to the task of stimulating the necessary changes.

What are needed, at this time, are new strategies. The creative task now commending itself to those involved in the regulatory debate is to design and implement those changes which can efficiently carry O.F.T. Codes of Practice into a more effective future.

One potentially useful strategy might be on the legislative horizon. The issue of a general duty to trade fairly has, in recent years, been gaining momentum (Circus, 1986a, b; Harvey, 1984; O.F.T., 1986a; W. Richardson, 1984b; Woodroffe, 1984). According to the O.F.T. (1986) discussion paper: "The main purpose of such a duty would be to raise trading standards generally and to improve the means of redress for consumers . . . and . . . such a duty with the aid of supporting Codes of Practice would establish a general set of standards for traders to follow." Thus, the intention behind the proposed legislation is -- so far as the O.F.T. is concerned -- similar to that behind O.F.T. stimulated Codes of Practice and Codes are perhaps to form an integral part of the legislation.

The potential impact of the legislation proposed would be better assessed against a backcloth of the rationale(s) for legislation and by reference to hypothetical drafting provisions. However, in terms of our model for code effectiveness we can briefly hypothesize that, as a strategy for improving code effectiveness, the proposed legislation might offer:

industry wide coverage -- greater publicity and need for recourse to Code guidelines -- greater Code awareness for all parties -- greater power to trade associations - - greater involvement of professionally trained trading standards

personnel acting on behalf of more ignorant and reticent consumers in conciliation, arbitration, and court actions

- - more stringent sanctions, perhaps via a Part 3, Fair Trading Act 1973 type assurance system.

Thus, our "Seven C's of Code Effectiveness" model has provided a framework for us to investigate the workings of O.F.T. Codes of Practice, to analyse and evaluate their successes and failures, to reach conclusions over the changes required in order to improve their performance, and to hypothesize that the proposed legislative duty to

3 3 0 William Richardson and David Morris

trade fairly should promote (disregarding at this stage the costs of such legislation) greater Code effectiveness.

APPENDIX

Codes Developed in Consultation with O.F.T.

Association

Industry Goods/Services Turnover

Covered Covered Notes

1. Association of Manufacturers of Domestic Electrical Appliances

2. Radio, Electrical and Television Retailers Association

3. England and Wales Electricity Boards

4. Scottish Electricity Boards

5. Association of British Travel Agents -- Tour | Operators

6. Association of British ] /

Travel Agents -- Travel| Agents J

7. Footwear Distributors Federation

8. National Association of Shoe Repair Factories and St. Crispin's Boot Trade Association Ltd. (and Other)

9. Motor Agents Association and the Society of Motor Manufacturers and Traders Limited

10. Vehicle Builder and Repairer Association

11. Scottish Motor Traders Association (Defunct)

Electrical Repairs and Servicing

80%

Travel Trade 90%

Footwear 60%

Shoe Repairers 60%

Motor Industry

Vehicle Body Repairs

Used Cars

85%

70%

Some major foreign manufacturers remain outside AMDEA. Some major retailers remain outside RETRA

Generally recognised as a strong association

Code is not compulsory

Responsible for approximately 95% of new car sales; 75% of used car sales

O.F.T. Codes of Practice

12. Furniture Associations (Five)

Branded Furniture Society; British Furniture Manufacturers Federated Associations; National Association of Retail Furnishers; National Bedding Federation Limited; Scottish House Furnishers' Association

13. Photography Associations (Seven)

British Photographic Association; British Photographic Importers' Association; Photographic Dealers' Association; National Pharmaceutical Association; Association of Photographic Laboratories; Institute of Photographic Apparatus Repair Technicians; Institute of Incorporated Photographers

14. National Association of Funeral Directors

15. Association of British Launderers and Cleaners Limited

16. Mail Order Publishers' Association

17. Direct Sales and Services Association

18. Mail Order Traders' Association

19. Post Office

20. Telecommunications services

) 21. Glass & Glazing

Federation

Furrliture Industry

Camera Films and Photography Sales & Servicing

Funerals

Launderers and Dry Cleaners

Direct Selling

Postal Services

Telecommuni- cations

Home Improvements

80%

80%

80%

90% Launderers 70%--75% Dry Cleaners

85%

90%

90%

80%

331

Dixons, Boots not in association

Non subscribers largely small "one man" businesses

G.U.S. not in association

Incorporates a bonding arrangement


22. Motor Agents Association Scottish Motor Trade Association Motor Cycle Retailers Association Motor Cycle Association

23. The British Holiday and Home Parks Ass6ciation Ltd. The National Caravan Council

24. Finance Houses Association

Motor Cycles

Selling, Siting and Letting Holiday

Caravans

80%

Consumer Credit 45%

not known

REFERENCES

Adamson, C. (1982). Consumers in business. London: National Consumer Council. Adamson, C. (1984). Consumer Affairs Consultant. Personal interview. Blake, M. (1984). Consumer Advisory Officer, South Yorkshire County Council.

Personal interview. Borrie, G. (1983). A horses for courses approach. O.F.T. Bee Line. London: Office

of Fair Trading. C.B.I. (1981). The future direction of consumer protection. London: Confederation

of British Industry. Circus, P. (1986 a). Towards a general duty to trade fairly? New Law Journal,

October 3, 948--950. Circus, P. (1986 b). Towards a general duty to trade fairly? II. New Law Journal,

October 31, 1043--1044. Cressey, J. M. (1984). Principal Officer (Consumer Affairs), South Yorkshire

County Council. Personal interview. Cyert, R., & March, J. (1963). A behavioural theory of the firm. Englewood Cliffs,

N J: Prentice-Hall. Gascoigne, S. (1984). Past Chairman, Institute of Trading Standards Administration,

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ZUSAMMENFASSUNG

Effektivere Interventionen auf Konsumgiitermiirkten -- ein Modellansatz fiir die Verbesserung der Verhaltensrichtlinien der englischen Wettbewerbsbeh6rde. Die englische Wettbewerbsbeh6rde, das Office of Fair Trading, ist verpflichtet, bei den einzelnen Wirtschaftsverb~inden auf die Erarbeitung und Verbreitung yon Ver- haltensrichtlinien zu dr~ingen, die der Verbesserung von Handelspraktiken dienen.

Die Authoren stellen ein Modell der Voraussetzungen f/Jr die Effektivitfit solcher Verhaltensrichtlinien vor, das in Figur 1 zusammengefaBt ist. Mit Hilfe dieses Modells werden die bereits bestehenden Verhaltensrichtlinien analysiert. Vor allem werden die Erfolge und MiBerfolge solcher Markteingriffe erklfirt. SchlieBlich wird die potentielle Wirkung der vorgeschlagenen allgemeinen Pfiicht zu lauterem Wettbewerb im Lichte dieses Modells diskutiert.

THE AUTHORS

William Richardson is acting subject leader and a member of the Business Policy team at Sheffield City Polytechnic. He was formerly Consumer Affairs Officer for South Yorkshire County Council. His address: The Gables, Royston Road, Cud- worth, Barnsley $72 8TU, S. Yorks, U.K. David Morris is Dean of the Faculty of Business at Coventry Lanchester Polytechnic, Priory Street, Coventry CV1 5FB, U.K.

towards more effective consumer market-place interventions — a model for the improvement of o.f.t....

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