Consumerism and Regulatory Powers in Sri Lanka

by Sarath Wijesinghe

Consumerism is the activism of the consumers and the response from the Government, traders, industrialists and manufacturers. Consumerism is well organised and powerful globally but not in Sri Lanka. In the West, consumerism has led to self regulation of trade and indirect price control due to fierce competition.

In Sri Lanka anti-merger and competition promotion are still in its primitive stages. Whereas in the West they say that the consumer is the King, and that the consumer is always right. This shows the importance given to the consumer on whom the "Trader" (trader includes trader, manufacturer and the industrialist).

Universal Declaration of Human Rights and many other conventions and norms have accepted consumer rights as a human right.

Article 25 of the Universal Declaration confirm the right to a standard of living adequate for the health and well-being of himself and of his family including food, clothing, housing and medical care and necessary social services and the right to security in the event of unemployment, sickness, old age, or other lack of livelihood in circumstances beyond control.

It is the duty of any government in power to pave the way for the consumer to enjoy their rights which are more fully described by the United Nations as follows:

1. The right to satisfaction of basic needs: To have access to basic, essential goods and services, adequate food, clothing, shelter, healthcare, education, public utilities, water and sanitation.

2. The right to safety: To be protected against products, production processes and services which are hazardous to health or life.

3. The right to be informed: To be given the facts needed to make an informed choice, and to be protected against dishonest or misleading advertising and labelling.

4. The right to choose: To be able to select from a range of products and services, offered at competitive prices with an assurance of satisfactory quality.

5. The right to be heard: To have consumer interests represented in the making and execution of government policy, and in the development of products and services.

6. The right to redress: To receive a fair settlement of just claims, including compensation for misrepresentation, shoddy goods or unsatisfactory services.

7. The right to consumer education: To acquire knowledge and skills needed to make informed, confident choices about goods and services, while being aware of basic consumer rights and responsibilities and how to act on them.

The right to a healthy environment: To live and work in an environment which is non-threatening to the well-being of present and future generations.

In Sri Lanka, the only piece of legislation available for the protection of consumers and also to protect "Traders" by regulating trade is the Consumer Affairs Authority Act No. 9 of 2003, which has replaced the Consumer Protection Act, the Fair Trading Commission Act and the Control of Prices Act which more or less based on principles of closed economy.

Open economy was introduced in Sri Lanka in 1977 and the concept of price controls and the assignment of price control inspectors are a part of history. It has been the policy of the then government of Sri Lanka to provide for a better protection of consumers to the regulation of trade and the prices of goods and services and to protect traders and manufacturers against unfair trade practices and restricted to trader practices.

Mahinda Chintana provides the same protection for the consumers and the traders, especially the local industrialists and manufacturers and traders whilst continuing free economic policies which is the world trend today.

It assures rapid measures to resolve financial and other problems faced by wholesale and retail traders who are vital elements in the national economy. In the Consumer Affairs Authority, the consumer is defined as "actual or potential user of any goods or services made available for a consideration by any trader or manufacturer" which means every citizen who even intends to be a potential consumer is a consumer.

The trade is regulated politically by the Minister of Trade, the Government, and the business community whilst the CAA is performing the duties as the main regulatory body in the country, also exercising quasi judicial functions based on natural justice. The appointment of a regulator is in line with the regulators and regulatory bodies in the West.

The best example is the regulator for British Rail. In the United Kingdom, it is one of the most powerful institutions which have enormous powers. A Regulator is appointed for a quick, reasonable and impartial solution considering all circumstances avoiding complex procedure and delay. Therefore, Regulators and Regulatory bodies are chosen very carefully by respective governments.

The regulation of trade is governed by Part II of the Act which has authorised the Authority to study on the distribution of goods and services, to issue directions to manufacturers or traders in respect of price marking, labelling and picketing of goods, giving directions not to sell or offer above marked price, directions or determining standards specifications relating to goods and supply of services, by inquiring into complaints and acting based on natural justice, enter into agreements with traders for maximum price of goods and standards, give directions against refusal to sell goods, denial of possession of any goods for purposes of grade or the sale of such goods subject to conditions, directions against hoarding of goods by any trader, declare certain items essential to the life of the community, advise the Minister on the subject and the procedure and to conduct inquiries against the violations, refer matters to the Consumer Affairs Council where the prices are excessive, investigation into references made by the Director General or a member of the public and to study and report to the Minister on matters referred by the Minster to study, give advisory reference to the Minister and to publication of reports, direct traders to display price lists, registration of traders, direct traders to issue receipts for purchases, directions against misleading deceptive conduct false representation and warranties in relation to services and goods and public efficiency report.

The Consumer Affairs Authority is the main Regulator which mainly deals above matters and other objects and functions stipulated in the Act. The Act and all the other information could be obtained by visiting our Website: www.consumeraffairs.gov.lk http://www.consumeraffairs.gov.lk/.

Today in the absence of closed economy the prices of goods and services are governed by the market trends and the traders. Even in free market economy the Act has provided under Section 18 to declare certain items as essential in order to assist the certain strata of the society which needs assistance.

Accordingly, the following 14 items are declared essential under Section 18 and for any price revision a "Trader" is bound to obtain the approval from the Consumer Affairs Authority.

1. Wheat Flour 8. Red Onions

2. Cement 9. Dhal

3. Milk Powder 10. Dried Sprats

4. LP Gas 11. Gram

5. White Sugar 12. Green Mung

6. Dried Chillies 13. Canned Fish

7. Big Onions 14. Chicken Meat

There are other regulators performing regulatory functions in their respective areas. Public Utilities Commission is set up under Public Utilities Commission Act and the objects of the Commission and some of the main objects of the Commission are to protect all consumers, to promote competition, to promote efficiency in both operations of a capital investment in industries, to promote an efficient allocation of resources public utilities industries, to promote safety and service quality in public utilities industry and to maintain benchmarks and international standards and also to ensure price control entities acting efficiency in public utilities industry.

The Commission has power to enter into agreements, hold inquiries, enter into contracts and advise. Presently many goods and services and industries come under PUC headed by the Commission and the Director-General who is the Chief Executive.

The other important regulator is the Telecom regulator, Telephone regulatory body consists of 5 member commission with a certain degree of administrative flexibility. The telephone has become a necessity for many household and it has become imperative to safeguard the consumers' interests.

Almost all the telephone companies are fortunate to collect enormous profits and it is doubtful whether their services are in compatible with their income.

Service providers have challenged many directions of Telecom Regulators in Court of Law. So is the Section 18 of the Consumer Affairs Authority Act which is very often challenged and contested by company.

Section 9 of the Act gives powers to the Commission to inquire into the complaints made by consumers and to grant relief. The majority of the complaints to the Telecom Regulator are related to billing telecommunication services where they commence public hearings under Section 12 of the Act in relation to improvement of subscriber bills.

The outcome and the efficiency of the regulator will be judged by the Consumer and results of consumerism.

There are other regulatory establishments in the form of Ombudsmen, such as Financial, Tax and Insurance Ombudsman. The consumer may seek the assistance of Financial Ombudsman by way of complaints alleging deficiency in financial services.

The word deficiency would suggest the services provided it is not up to the expected standard.

In the Indian Consumer Protection Act of 1986 the deficiency is defined as any fault, imperfection, shortcoming or inadequacy in the quality. The Company Law Act No 17 of 1982 which is now replaced has provided for a Financial Ombudsman whereas even in the CAA Act the mandate of the authority covers services which mean services of any description which is made available to actual or potential user and includes Banking, Financing, Insurance, Shipping and Entertainment.

There is no rule that all financial institutions should be members of the Finance Ombudsman Scheme. But we note that the scheme is successful with able services of the Financial Ombudsman who is a retired judicial officer.

Tax Ombudsman is appointed by the cabinet for a period of 2 years and the present Ombudsman too is a retired judge who has resolved many disputes by negotiation. Insurance Ombudsman who has been established under the Companies Act No. 17 of 1982 whose primary objects are to deal with reference in relation to complaints and disputes promote awareness among the public encourage the settlement of dispute and to create a quorum at which Sri Lanka's insurance institution can engaged in discussions.

The present Ombudsman is a highly respected and reputed academic and a lawyer doing a fantastic job.

This is basically the structure of consumerism and regulatory powers in Sri Lanka which requires lot of changes and improvements to maintain international and expected standards in consumerism and regulatory powers.

In United States the most extensive application of "Impact Legislation" has taken place where a wide range of "Public Interest Law" movement has been concerned with upholding the interests of groups of citizens in the Courts.

In Australia, the trade practices Act No. 1974 permits an incorporated consumer groups to bring an injunction against certain unfair trading practices.

In Europe impact Legislation by individuals is rare due to the absence of sophisticated legal scheme whereas in England the legal scheme is vibrant.

In France Consumer Law reform commission has proposed a French equivalent based on civil law, which is the Law prevalent in France as against at the serial system in the UK. In Belgium, Denmark and the Netherlands under the Trade practices Act of 1971 consumer organizations have the right to seek injunctions before the Commercial Courts.

In England Child Poverty action rule, "SHELTER", "MIND" Trade Unions, Associations and Consumer Organizations are extremely active and vibrant with the backing of the Legal Aid Scheme. In India public interest litigation helps consumers and active groups with existence of consumer Courts and consumer organizations.

It is time that the civil society, NGOs, voluntary sector, and the professionals to take the lead to takeover the consumerism activism by acting as a catalyst and a guiding force with the CAA in order to establish consumer organizations in every village in order to establish organized alert consumers, and just traders to make Sri Lanka a better place for consumers to live in harmony based on due process and respect to Rule of Law and Respect to each other.

(The writer is the Chairman of Consumer Affairs Authority of Sri Lanka.)