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Case Study:

What do the Central American Country of Belize, the South American Country of Suriname, and the Caribbean islands of Jamaica and Barbados have in common?

Together with another 11 Countries in the region, one answer is that they are all members of CARICOM. CARICOM is an organisation of 15 Caribbean nations and dependencies whose main purpose is to promote economic integration and cooperation among member Countries. There was a recognition of the need to improve their consumer protection arrangements through the delivery of a targeted project.

The history of the consumer movement within CARICOM Member States can be traced back to 1966 with the establishment of the first non-Government consumer organisation in Jamaica. Since then, a number of other organisations have been established in several Member States, both Government and non-Government, with the chief function of safe-guarding the rights of consumers.

The project commenced in September 2009. The project required the creation of a means for assessing the needs of consumers and consumer bodies and the development of an action plan. The work involved an assessment of priorities both at the Member State level and the regional level. In particular, he was asked to consider how regional working in the field of consumer affairs might be enhanced.

In order to undertake the work, the 15 Countries were required to be visited and a range of stakeholders consulted. In total, representatives from over 120 different organisations were met, either in one to one meetings, or in focus group sessions or workshops. These included meetings not only with consumer affairs bodies, but also other key stakeholders including politicians, business leaders, community and voluntary groups.

The region is very diverse and presents some unique challenges for Countries seeking to harmonise their arrangements. This makes the coordination of consumer affairs particularly challenging. Many of the Countries have relatively small populations, making the business of delivering cost/effective public services a genuine challenge. These relatively small populations mean that access to goods and services may be more limited than in Europe as markets may appear unattractive to many businesses. However, population sizes do range from 9m in Haiti to less than 5000 in the British overseas dependent territory of Montserrat.

It is also fair to say that there is a significant diversity in the relative wealth of consumers in the region. Even before the terrible earthquake in Haiti in January 2010, that Country ranked as the poorest Country in the Western world. Other Countries such as The Bahamas and Barbados enjoy relatively high levels of affluence on the basis of GDP per capita. Finally, the region is geographically large, covering 3 time zones and travel between Member States is often not easy.

In Trinidad in March 2010, the final report was presented to a meeting of Consumer Affairs stakeholders. This meeting was called by CARICOM and present were all the Consumer Affairs leaders from Government and NGOs from across the region. The meeting was regarded as very important locally and was hosted by Trinidad and Tobago’s Minister of Legal Affairs and covered by local television.

So what were the key findings relating to consumer affairs in the CARICOM region?
Although of course there were significant differences between the Countries, there were also some consistent themes.

Possibly the key issue in 10 of the 15 Countries, is that there is no core consumer protection legislation at all. With notable exceptions, where laws existed they tended to be somewhat piecemeal and out of date covering specific consumer matters such as weights and measures, public health and hire purchase of goods.

What emerged however was that consumer affairs organisations had become highly imaginative in terms of how they might use the inadequate tools at their disposal. Time and again, consumer officials in Government used the expression ‘moral suasion’. This was the technique that agencies might use to resolve consumer complaints - influencing or pressing, (but not forcing) a business to resolve a consumer complaint. Government officials in one particular Country candidly admitted that they would rely on the fact that businesses would simply not know how weak the laws were when encouraging them to resolve a complaint.

The current legal framework has a number of other implications, in particular, it appeared to disempower consumer organisations from adopting a proactive approach to consumer affairs. Most consumer organisations stepped in when they received a complaint and a consumer felt aggrieved. Inspections, or business education and support initiatives were rarely undertaken in the absence of legislation enabling this to be done.

Perhaps the greatest contrast between consumer affairs activities in the CARICOM countries and experience in the UK and Europe was the focus on price control activities. Indeed, in the majority of Countries, almost the sole focus of Government consumer affairs departments was seeking to control prices.

Meetings with consumer focus groups and stakeholders revealed significant concern in the region over high prices. Indeed, any question regarding the issue of greatest concern for consumers in any of the fifteen Member States always resulted in the answer ‘high prices’. It is not surprising therefore those Governments should seek to attempt to address this issue. The real question is whether or not it is possible in an increasingly globalised world for Governments to have any significant effect on actual prices of commodities.

The actual mechanics of the price control arrangements varied from Country to Country, but there were some consistent approaches:

  • In the main, price controls were applied only to imported and not home produced goods
  • Governments created a price ceiling by fixing the maximum mark up on the imported price which could be applied at the wholesale and retail level
  • A significant amount of the time of consumer officials was devoted to calculating the maximum permitted prices and visiting premises to ensure these were not exceeded.

During the course of the project, it was difficult to find any evidence that these arrangements actually had a significant impact on lowering prices. Indeed, there were many indicators that the arrangements might actually encourage or even create higher prices. Certainly, businesses seemed to regard the indication of a price ceiling as official endorsement by Government that this was to be the actual selling price. This removed competition between businesses and prices all tended to be the same – the maximum allowable.

It is possible to imagine that if Governments were artificially fixing prices at a level lower than the market would naturally produce, businesses would be complaining bitterly. In fact, John met many business representatives and this was not a concern they had. The possible inference that might be drawn is that the price ceilings are rather generous and business has no difficulty with them.

One additional problem is that the system discourages consumers from shopping around. As has been stated, prices vary little, so there is little incentive to do so. Also, the whole system may breed a culture that is disempowering for consumers. In other words, consumers feel that Government is there to sort out their problems and they are not a party to looking after their own interests.

What were other consumer concerns in the region?
After ‘high prices’ the next most identified problem by consumer focus groups was the proliferation of low quality and substandard products. One reason for this may be the lack of adequate consumer protection legislation. As other parts of the world tighten consumer laws, the risk for the region is that it becomes the dumping ground for products that cannot be sold elsewhere. Particular consumer concerns related to the selling of out of date food and food with date markings erased or altered.

Increasing access to credit and therefore debt was another concern identified by the groups. Hire purchase is the most commonly used form of credit, but again there are few laws that help consumers. Indeed, where Hire Purchase legislation exists, it is mainly to help businesses get their property back rather than provide consumers with any meaningful protection. Indeed, one CARICOM Country still has a debtors’ Court and debtors’ prison where consumers may reflect on the error of their ways!

So what may be the way forwards?
The final report identified 9 key issues or priorities to be addressed. These were presented to the meeting of the Consumer Affairs stakeholders in March 2010. The Stakeholders endorsed these and committed themselves to the action plan. CARICOM itself will be seeking to use donor funding to develop further consumer affairs projects in the region.

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