Treating customers fairly

There were none of the usual CSR crowd at today’s the UK Office of Fair Trading (OFT) conference in London on ‘business leadership in consumer protection‘. This is a shame because the OFT is looking at the heart of a number of issues crucial to responsible business behaviour, in particular can industries regulate themselves to treat their customers fairly.

A number of models of self-regulation were discussed and representatives from the Advertising Standards Authority, ABTA, the Carpet Foundation showed how their approaches to promoting standards of good behaviour were improving outcomes for consumers.

One of the most interesting points made by the OFT is about the ‘market for lemons’ theory in economics. It shows that in lots of markets (like for second-hand cars) good products are removed by the sellers from the market because consumers do not have the ability to really identify which product is a high quality product. Companies can only rely on reputation to some extent to sell their goods and services, so any certification system that is established which helps consumers to identify companies that offer quality products is attractive, if it works. The key features of certifications that work are that the certification actually differentiates good companies from bad ones and the certification is recognised and understood by consumers. This is certainly a challenge for the GoodCorporation Business Ethics Standard. With our 23% fail rate to date we are confident that we have a credible assessment. But have we got the message out to the world – not nearly enough yet!