The quick escalation of the health issue, specifically, the management of the COVID-19 epidemic and its quick rise to the scale of a pandemic have defined the further choice of government policies. The focus on controlling the spread of the disease, at the same time increasing awareness among the target population members and convincing them to accept the danger as a real one have been prioritized. However, despite the efforts of the U.S. government authorities, the measures undertaken so far seem to have been failing given the spike in the number of people developing the symptoms of COVID-19, as well as the mortality rates among the infected population.1 Therefore, the discussion of the policy and the role that the government plays in controlling citizens and its own actions, is long overdue. Despite the attempts at safeguarding its citizens, the U.S. government has ben failing miserably with the establishment of the Coronavirus Aid, Relief, and Economic Security ( CARES ) Act due to the lack of control over the attitudes and behaviors of citizens and the efficacy of its own actions.
The observed tragic trend meets the expectations set by James Madison in his famous statement in Federalist. To trace the causes of the problem, one will need to consider the mechanisms of policymaking. When creating productive and effective policies, one needs to bear in mind that most people are very flawed and lacking awareness and that regulations and policies are also designed and implemented by fallible human beings. Remarkably, the quotation above also discloses the controversial nature of policies, possibly implying that the creation of an impeccable regulation followed by every citizen is impossible. By establishing the fact that people are prone to making mistakes and lapses in judgment, Madison suggests that no policy will ever be effective enough to reach the expected objectives and deliver the required results, attaining the 100% rates of compliance.
Moreover, Madisons argument can also be interpreted as the impossibility of reaching complete understanding between the intentions of the government and the response of the citizens. Indeed, if policies are meant to be designed by people with inherent flaws, misconceptions, and even prejudices that will meddle with their ability to introduce unbiased regulations, the threat of citizens failing to comply with the said policies either intentionally or from a genuine place of misunderstanding will always exist. The latter presumption proves particularly correct when considering how the CARES policy for managing the pandemic of coronavirus has been handled and received.2
The observations above do not imply that the CARES policy was completely inefficient or pointless; quite the contrary, there are numerous indications of its positive effects on the well-being and the overall health management rates within the American community. Specifically, the recent study on the subject at hand has shown that the introduction of the CARES act has contributed to the increase in the accessibility of care.3 However, the specified effects still exist largely in theory since the CARES Act has not been fully implemented, and the scope of its effects has not yet reached the size that allows making long-lasting judgments concerning the efficacy of the policy and the extent to which the government has managed to embrace the needs of every single group within the U.S. community.
The existing data also shows that Madisons assumptions prove to be disastrously correct for the current policies regarding the issue of COVID-19, namely, the CARES regulation. In its nature, the act was supposed to safeguard the rights of vulnerable groups first. The specified denizens of the U.S. population should have included the indigenous population primarily, as the CARES Act clarifies.4 However, when considering the implications of the specified policy, one will realize that the policy was significantly mismanaged due to the lack of awareness about the needs of marginalized groups and vulnerable populations, specifically, indigenous people.
In addition, the fact that the current policy fails to acknowledge the tensions within the relationships between the U.S. authorities and the indigenous populations of North America also warrants discussion. According to van Dorn, Cooney, and Sabin, The deep history of injustice by the US government towards these people means that the US response will be looked on with suspicion. 5 Therefore, the policy in question demonstrates Madisons argument and proves it in its entirety, pointing to the fact that the lack of control over the population and the management of its needs, leads to a drastic failure of a policy. Drastically low levels of awareness among government members concerning the said needs have also contributed to the poor design and implementation of the policy.
Overall, the problem of reconciling democracy, political power, and the extent to which the government is willing to represent its population and the opportunities that it takes to exert its power can be seen in the CARES policy. Although the U.S. government has a plethora of opportunities for studying the needs of vulnerable groups and the existing opportunities for meeting the needs in question, the range of steps that the U.S. authorities have taken so far appears to be insufficient for safeguarding the specified groups. Specifically, although offering a semblance of support, the CARES Act leaves indigenous American groups vulnerable to the COVID-19 pandemic by leaving the level of access comparatively low for the specified communities.
In turn, the CARES Act has also proven the second part of the assumption made by Madison, namely, the idea that policies re always doomed to be mismanaged at least slightly due to incompliance among general audiences. The CARES Act is one of the most recent examples of the specified argument as the extent of readiness with which people are likely to approach the requirements set in the CARES Act are very low presently.6 The observed issue can be explained from the perspective of trust, or, to be more accurate, the lack thereof, between the government and the citizens. As a result of misinformation in social media, as well as the governments failed attempt at controlling the spread of false data, a large portion of U.S. citizens has been misinformed, which can be seen as a major failure of the policy in question.
Madisons argument about the need to establish tighter control standards, particularly, in regard to ensuring the awareness of the government and the compliance of the population, is doubtless. Although there are multiple nuances to the specified argument, as the case of meeting the needs of native representatives of the American population has shown, the general concept of creating an effective communication channel remains a viable solution to the problem. Consequently, Madisons statement concerning the problem of control within the existing governmental structures, including the external and internal controlling issues, remain viable even in the present-day settings, as the case of CARES Act as the tool for managing COVID-19 shows.
The issue that Madison addresses, namely, the reconciliation of the huge amount of power that political figures hold and the necessity for them to act on the principles of democracy can be managed by introducing a greater range of control over the choices that the said state authorities make. Namely, the public involvement in the political agenda and the development of policies needs to be increased.
The issue of transparency as one of the main premises for addressing Madisons dilemma also needs to be discussed. Although James Madison was entirely correct in his assumption that the government lacked the control over citizens, as well as over its own actions and decisions, as the recent policy regarding the COVID-019 issue has shown, there are still some strategies that can potentially help in addressing the concern in question. Specifically the reinforcement of transparency in regard to the choices that the state authorities make and the motivations behind the said actions will have to be made available to the public.
The issue of representation is another key problem that has led to the confirmation of Madisons argument, as the CARES Act has indicated. Namely, the inconsistent dialogue between the U.S. government and the Native ethnic groups has led to the poor implementation of the policy and the failure to manage the health-related needs of the said vulnerable populations. The issue of health literacy, specifically, its low rates, and the lack of access to services such as tests for coronavirus have been affecting the well-being of Native ethnic groups in the U.S. severely.7 Therefore, in accordance with Madisons theory, the dialogue between the government and the specified populations needs to be established so that the latter could be represented properly and that their needs could be met. As a result, the future policy for managing the issue of COVID-19 and providing the American population with the needed services will be handled with greater success.
However, it would be a mistake to presume that the issue of failing to embrace the needs of the target groups is completely unsolvable. Though taking every minute detail into account is barely possible, the U.S. government could collect more data on the factors that lead to reduced access to healthcare services for vulnerable groups, primarily, native Americans and other indigenous cultures. It is believed that high poverty levels and low extent of healthcare literacy are the primary causes of the observed phenomenon; however, further research into the subject matter will still be required. Remarkably, the opportunities for improved communication that the recent technological innovations have provided could be used to address the problem outlined by Madison in his famous statement. By including innovative tools for the promotion of mass health literacy and the eradication of COVID-related myths, the U.S. government will be able to increase the levels of compliance with the improved policy aimed at safeguarding the well-being of U.S. citizens.
With the introduction of the measures described above, the dilemma described by Madison will be resolved, at least, in the context of the current coronavirus crisis and the CARES Act. Thus, the assumption that the government policies will always remain inherently flawed will be proven wrong. However, until then, the argument posited by Madison and implying that the governments decisions and policies will be inevitably misaligned with the needs of the population due to the lack of information and the presence of self-interest will remain true.
Bibliography
Boccia, Romina, Lindsey Burke, PhD, David R. Burton, Rachel Greszler, Adam Michel, Norbert J. Michel, PhD, Jude Schwalbach, Parker Sheppard, PhD, and Paul Winfree, Congress Should Focus on Pandemic Control and Fix the CARES Act for an Economic Rebound, Institute for Economic Freedom, vol. 3484, 2020, pp. 1-14.
Colenda, Christopher C., William B. Applegate, Burton V. Reifler, and Dan G. Blazer, II, COVID-19: Financial Stress Test for Academic Medical Centers. Academic Medicine, vol. 95, no. 6, 2020, pp. 1-11.
Erwin, Cheryl, Julie Aultman, Tom Harter, Judy Illes and Rabbi Claudio J. Kogan. Rural and Remote Communities: Unique Ethical Issues in the COVID-19 Pandemic. The American Journal of Bioethics, vol. 1, no. 1, 2020, pp. 1-8.
King, Jaime S. Covid-19 and the Need for Health Care Reform. New England Journal of Medicine, vol. 1, no. 1, 2020, pp. 1-10.
Maier, Charles S., and Ian Kumekawa. Responding to COVID-19: Think through the Analogy of War. Edmond J. Safra Center for Ethics White Paper, vol. 10, 2020, pp. 1-18.
Vaccaro, Alexander R., Charles L. Getz, Bruce E. Cohen, Brian J. Cole and Chester J. Donnally, III, Practice Management During the COVID-19 Pandemic, The Journal of the American Academy of Orthopaedic Surgeons, vol. 1, no. 2230, 2020, pp. 1-12.
Van Dorn, Aaron, Rebecca E. Cooney, and Miriam L. Sabin. COVID-19 exacerbating inequalities in the US. The Lancet, vol. 395, no. 10232, 2020, pp. 1243-1244.
Footnotes
Romina Boccia, Lindsey Burke, PhD, David R. Burton, Rachel Greszler, Adam Michel, Norbert J. Michel, PhD, Jude Schwalbach, Parker Sheppard, PhD, and Paul Winfree, Congress Should Focus on Pandemic Control and Fix the CARES Act for an Economic Rebound, Institute for Economic Freedom, vol. 3484 (2020): 3.
Jaime S. King, Covid-19 and the Need for Health Care Reform, New England Journal of Medicine, vol. 1, no. 1, 2020, p. 4.
Christopher C. Colenda, William B. Applegate, Burton V. Reifler, and Dan G. Blazer, II, COVID-19: Financial Stress Test for Academic Medical Centers, Academic Medicine, vol. 95, no. 6, 2020, p. 2.
Charles S. Maier, and Ian Kumekawa, Responding to COVID-19: Think through the Analogy of War, Edmond J. Safra Center for Ethics White Paper, vol. 10 (2020): p. 3.
Aaron van Dorn, Rebecca E Cooney, and Miriam L Sabin, COVID-19 Exacerbating Inequalities in the US, The Lancet, vol. 395, no. 10232, 2020, p. 1243.
Cheryl Erwin, Julie Aultman, Tom Harter, Judy Illes and Rabbi Claudio J. Kogan, Rural and Remote Communities: Unique Ethical Issues in the COVID-19 Pandemic, The American Journal of Bioethics, vol. 1, no. 1 (2020): p. 2.
Alexander R. Vaccaro, Charles L. Getz, Bruce E. Cohen, Brian J. Cole and Chester J. Donnally, III, Practice Management During the COVID-19 Pandemic, The Journal of the American Academy of Orthopaedic Surgeons, vol. 1, no. 2230, 2020, p. 2.
The consumer protection policy refers to the stipulated mechanism which gives the consumer the freedom to shop and enjoy various products within their establishments. For instance, the European Union (EU) policy and regulation offers freedom to customers or consumers linked to the European Community to operate freely and shop anywhere and to enjoy protection and price advantage and the supply of quality goods to them.
Vulnerable consumers refer to those that are exposed to unfair pricing systems, low quality products, limited consumer rights, inadequate access to information and the repression of speech. Vulnerable consumers may include normal buyers, organizations or individuals who are exposed to unfair consumer practices from the supplier, dealers, government or the representative unions.
According to the Consumer Protection Strategy of 2007 to 2013, the primary role of consumer protection is to enhance equal classes of protection and security within the EU. It also facilitates a rich integrated domestic market.
According to the EU, the objective of a good customer protection approach includes the ability to empower the consumer through the creation of a transparent market which can supply the consumer with a wide spectrum of options in terms of quality of prices of commodities. It is also the objective of the policy to safeguard the consumer from all risks and threats.
The Consumer Policy Strategy focuses on different priority areas that include favorable consumer protection policy, fair oversight of consumer market and state consumer policies, facilitating consumer policy through the establishment of market regulation tools and placing of customers at the helm of other EU policies.
The strategic policy is expected to inform and educate the consumers through integration of the practices of the EU centers. The UK, a member of the EU is bound by the directive of the domestic UK law.
The consumer protection claims are handled when the complaints are forwarded to the director general who deals with fair trade. It is however not easy for consumers to complain straight to the OFT1 and they have to employ a middleman. This study evaluates the European and UK policies of consumer protection. The essay will focus on the impact of fair, favorable or unfavorable policies on the consumers.
Background
Consumer protection constitutes laws and rules organized to facilitate consumers rights protection and ensure fair trade. It is also the role of the policy to safeguard the weak and vulnerable consumers. Consumers who cannot take care of themselves or who are afraid to take a step of claiming their rights have the advantage of obtaining anchorage from the consumer policy and regulation approaches.
The policy not only protects the consumers but also enlightens them on the various rights and existence of consumer support agencies. The agencies include Consumer Protection Organization, Federal Trade Commission, ombudsmen, business consultancies and government organizations.
A consumer2 is a person who procures goods and services for consumption or direct ownership. His aim is to keep or use the service or goods and not sell them.
Vulnerable clients
When a consumer is weak or not equipped enough to fight for his or her rights in respect to commodity prices; he or she is said to be vulnerable. Exploitative policies among the various nations under the EU have subjected consumers to inflation and sub-standard products and services for a long time. Efficient and effective legislation safeguards consumers against health risks and risks related to unnecessary expenses.
Weak consumers cannot file their complaints when faced with inappropriate services and low quality products from sellers and manufacturers. They are forced to buy and use what to them is substandard and inconvenient but due to the need for the particular commodity, they are forced to succumb to the demand and go on procuring it.
The EU3 and UK policies both outline measures for the consumer protection but not all are put into consideration especially when the issues are related to health, ethics and quality production.
Other types of vulnerable consumers comprise of those informed individuals who are always ready to fight and express their concerns but lack the intervention of a middleman or somebody who can represent them in the judicial system or at the high office for immediate action.
Vulnerable consumers4 may also include the normal buyers who buy essential commodities like food and clothing even if the prices are compromised. They are highly taxed and tend to pay extremely high to acquire the product differently from other consumers from different locations who use the same product.
The consumers may need to complain but the communication channels may be blocked by certain interested parties. The conditions can also become oppressive and inconvenient because of little intervention from the observers and other agencies under the EU. The observers can be government agencies, foreign experts and rights protection facilities.
Regulation and consumer policy
Proper regulation and consumer protection help both the consumer and the market to work more efficiently. The policies are usually concerned with advertising, complaints, mergers and competition, transparency, fairness and consumers rights. The consumer protection policy and regulation in Europe and the UK5 prioritize advertising as a move towards the creation of a competitive and fair market.
The advertising clause serves to improve information quality by maintaining responsible and appropriate standards. The EU Consumer Policy works towards enhancing the consumers concerns at the EU level and various issues are addressed through legislative processes. The clause on mergers ensures that all issues are evaluated in the merger or through competitive enquiries.
The principle of consumer regulation is usually responsible for facilitating sensible industrial regulation and evaluation with focus on ensuring consumer s rights regulation. The clause on super complaints deals with market failure and makes informed decisions by using the power of the super complaint network.
The consumers product safety approach assures the consumers the safety of given products and the authority to question safety standards and deceptive operations of the market.
The European consumer policy and regulation
The European consumer policy and regulation is a destination approach in terms of performance, structure and evaluation. The strategic approach focuses on the consumers rights in the market mechanisms. It stresses on a number of considerations. The approach considers the clause on fair consumer protection and regulation to be an efficient one in safeguarding consumers interests.
In this case, the Council Commission focuses on simplifying the laws by amending the major directives on consumer protection. The commissions responsibilities constitute the publishing and making of a Green Paper Publication on the evaluation of consumers protection. The commission necessitates harmonization towards an improved trend and facilitates an effective consumer protection strategy.
The approach by the European agency focuses on favorable redress and enforcement of the consumer protection laws. The consumer is mandated to monitor the state enforcement systems through surveying and close examining their performance. For an effective, fair and open market, the European consumer policy6 and regulation focuses on the fair evaluation of the consumer market.
It also monitors the national consumer policy. Market surveillance has been enforced through employment of devices such as RAPEX (Rapid Alert System) and also through cooperation from USA, China and other countries working together with the EU in ensuring the continued maintenance of consumer safety. The policy and regulation approach has always prioritized consumer protection.
The commissions responsibility is to ensure that the consumers access health, transport and industrial facilities. It also ensures that all products of general interest and global service at the EU level are protected. Education is crucial for the consumer and the European commission on consumer protection policy and regulation because it promotes information, sound decision making and awareness in the consumer.
The commission finances the initiative aimed at providing information to prospective consumers like actions by the European Consumer Center Network (ECC-Net). The commission also participates in campaigns in newly established member states. The consumer policy strategy of 2007 to 2013 aims at uniting the 27 national domestic markets to form the biggest retail market internationally.
In the wave of the latest expansion, Eurostat targets 495 million EU inhabitants. The prospects of e-commerce are not fully exploited. The consumer strategy is yet to be formulated by the commission. Reports on consumer expenditure show 58% rise in the EUs GDP.
Many considerations have in the past been made by the commission but at the moment, all units represented can be able to enjoy the advantage of the retail market with vulnerable groups especially the elderly risking being penalized.
The Green Paper Review on consumer acquisition stipulates that the operational consumer protection laws are based on little harmonization and permit member states to adopt a better formulated legislation. The Green Paper unveiled a public consultation forum which was later terminated in 2007.The forum focused on reviewing the consumer acquisition policy.
The forum proposed three options for the purpose of harmonization. The first option involved full harmonization of the policies on consumer protection. The second option incorporated little harmonization supported by a symbiotic recognition clause.
The third option integrated harmonization which involved the establishment of firms in the various member states; all complying with the rules and regulations applied in their states. The Green Paper proposes the reviewing of the main directives on consumer protection and the establishment of new consumer credit directives. The paper also adopted the drafts of two evaluation reports.
One was a directive on financial services and the other was about general product safety. The Commission for Health and Consumer Safety operates under the docket of the European Commission. The present commissioners post is occupied by Toni Brag. This docket is responsible for issues of public and animal health, food safety and the consumers welfare functions.
The policy by the commission on the promotion of warnings on smoking of tobacco has been an effective market approach towards public health stimulation. Progress has been realized and the commission has been able to address the issue of pictorial warnings. This fact has enabled a majority of the European nations to impose bans on public smoking.
This legislation was proposed by Marcos Kyprianon, head of Barossa Commission on the subject of health and consumer protection. In 2007, Commissioner Marcos unveiled a project that handled the short supply of organs donation within the EU. This plan involved promotion, donor cells and specially informed medical staff.
The various commissioners with remarkable adjustments include Richard Barco from Ireland (Jenkins Commission), Stanley Clinton from the UK (Delver Commission i), Grigoris Wafts from Greece (Deloris Commission ii), Christian Scrivener from France (Deloris Commission ii), Emma Boning from Italy (Santer Commission), David Bryne from Ireland (Pride Commission and John Dali from Malta (Barossa Commission).
The present portfolio of clauses and acts involves the president, vice president , director general of the agencies and legislative personnel.
The assembly portfolio involves agriculture and rural development, climate actions, competition panels, development schemes, digital agendas, economic affairs, monetary affairs, education and cultural networks, environment, financial programs and budgetary scheme, health and consumer policy, industry and entrepreneurship, international cooperation, humanitarian aid and crisis response and justice, citizenship and fundamental rights.
These entire parameters make the European Consumer Protection Unit what it is today.
UKs policy and regulation on consumer protection
The UK being a part of the EU is legally bound by the policies of the EU. The intervention of the EU law, the UK policy and regulations are emerging to be independent entities with different procedures and regulations to safeguard the consumers.
The UK tends to recognize the different areas that the EU has attempted to enforce the policy but failed and the UK has in the past made attempts to resuscitate it. In the different circumstances, especially where domestic laws are crucial, matters concerning consumer protection are usually evaluated and involve contract restitution tools or criminal laws.
The issues pertaining to consumers are configured and evaluated as complaints are forwarded to the general director in charge of air trade. Direct complaints from the consumer to the OFT are not allowed. An intermediary has to relay the complaint to the OFT. The intermediary provides legal information and advice to the respective complainant.
He can also decide to take the complaints to the trading standard for further evaluation. Following the restriction placed on the Enterprise Act 2012, uncollected complainants face the challenge of not knowing whether their complaints will be considered or not. This aspect becomes difficult for the individual consumers who are unable to access the outcome of their complaints.
The consumer can in certain circumstances forward large volumes of complaints to be evaluated systemically. The OFT is reported to be lenient and rarely takes companies to court but prefers slim touch regulation policies. The consumers complaints raised against the organization or company do not go through publication but pass through investigative work.
Certain consumer protection laws like the unfair stipulation of the Consumer Contract Regulation of 1999 or Distance Selling Regulation of 2000 were directives derived from the UK implementation. The OFT becomes responsible for enforcing this regulation.
However, these policies can lead to a problem considering that the legalization tackles individuals complaints and ignores systemic complaints from them. The OFT plays the role of the UKs official watchdog in respect to competition and consumer insights. It oversees the operations of the market at the local and international level through trading standards offices.
General advice on consumer operation can be drawn from the consumer docket or through the Citizens Advice Bureau Brand. The UK Policy and Regulation integrates several acts and clauses.
They include Sales of Good Act 1979, Unfair Contract Terms Act of1977, Consumer Protection Act of1987, Electronic Consumer Regulation of 2005, Consumer Protection Regulation of 2000, The Enterprise Act of 2002, Consumer Protection from Unfair Trading Regulation of 2008 and General Product Safety Regulation of 2005.
These acts have existed for a long time and have maintained the UKs dominance within the European community. These policies on consumer protection have affected many acts of parliament, government departments, statutory instruments lobby groups and citizens with the goal of facilitating a market economy that is fair. The policies ensure that consumers enjoy quality and safe goods and services.
The primary zones of regulating consumer matters include the product safety evaluation that protects people from buying potentially harmful goods. It ensures favorable terms for goods and services by elimination of unfair terms. It also includes financial regulation to facilitate credit access by ensuring that it is affordable.
The zone also requires that consumers fully understand the terms and obligations attached to loans and credit facilities. The other zone deals with strong competition especially from the private sector by elimination of cartels, destroying monopolies and dissolution of mergers.
Even though the UK is a part of the EUs internal market, it works alongside other countries from Europe and EU institutions by outlining and enforcing transitional policies. A lot of parties play different roles in the maintenance of the policies with respect to the established laws. Examples of them include the Bank of England, OFT, Financial Services Authority, Competition Commission and the European Commission.
The Consumer Advocacy Group is a crucial organization that maintains justice and transparency with respect to the consumers protection policies. The supposed super-complainant aims at empowering the consumers concerns. The consumers in this case become vulnerable by not having individual access to vital information. The information can form a basis of evaluating the market.
Eight types of advocacy groups have been structured since the year 2007 and they include CAMRA which is a lobbying cluster that deals with quality and nature of beer and the Citizens Advice Bureau which provides free legal advice and specific help on consumers rights in the UK.
Others include Water Voice, Consumer Direct, Post Watch and General Consumer Council of Northern Ireland, Good Garage Scheme and the National Consumer Council. The Consumer Association has tangible authority of taking action as envisaged by the Completion Act of1988. The association is a lobby assembly and is sponsored by subscription of regular consumers.
The street fundraising initiative that originates from charity mergers is usually an offensive and aggressive move that violates legislation and policies outlined by regulating agencies. Different acts facilitate different clauses and fields. For product safety, the Consumer Protection Act facilitates safety of both goods and services.
For finance and credit, the Consumer Credit Act of 1974, Financial Services Act of 2010, Financial Services and Market Act of 2010 and financial ombudsmen services facilitate monitoring policies. The Competition Act of 1998 and Enterprise Act of 2002 generate healthy and fair competition and practices.
UKs assistance to the vulnerable consumers
The UKs regulatory policy makes her a stronghold when it comes to consumer protection. The clause on fair trade allows individuals from England, Wales and other parts of UK to enjoy fair trade. Fair trade refers to a good pricing system, fair competition and market procedure. This act tends to empower the weak and depressed consumers as it gives them hope of justice and fairness.
The policies are able to outline what is unfair and inform the consumers on the current market structures. The product safety regulation clause protects consumers, general public and various stakeholders from using harmful products and services. For example the Tobacco Awareness Scheme is aimed at informing individuals with little or no information on tobacco and narcotics about the dangers of using drugs.
Customers or consumers benefit directly or indirectly from this clause. They benefit directly through information availability and indirectly through third parties. The financial regulation clause helps the less informed consumers and general public on financial services. The policy helps individuals to recognize the need for accessing realistic loans and credit facilities.
It is the mandate of the Consumer Protection Commission and Agency to facilitate fair monetary organizations and authentic signatories. Two types of consumers are found in the UK.They include those consumers who seek financial advice from established individuals and successive personalities and those who play the try and error technique. They latter operate by chance.
To them, financial gain is based on luck and previous experience. The consumer policy and regulation tends to address the needs of these consumers by creating educational programs in media and social communication networks like Face book7 and Tweeter8.The clause on competition policy and regulation within the private quarters helps in controlling cartels and fighting monopoly.
Monopoly has been a menace to the common consumers who have been subdued by the cartels in favor of certain individuals. They help in abolishing mergers that appear unfair and improperly constituted. The consumers are able to enjoy commodities The Consumer Policy and Regulation protects consumers from the freedom from monopoly and egocentric individuals.
The role played by the OFT has been a crucial one in solving consumers complaints through legal means. The OFT is able to speak for the weak, irresponsible and vulnerable consumers. The movement of the complaints from the OFT to the trading standards helps the organization to conduct comprehensive investigations.
The proximity focus by the OFT is to maintain links with its consumers through formation of small groups that act as a representatives of the consumer cycle. The groups are able to convey the complaints to the OFT. The OFTs nature of not prosecuting companies has been able to encourage different companies to solve their issues and consumer complaints amicably and responsibly.
Consumers are safeguarded from fear of facing prosecution; especially if it is a scheme that undermines the Consumer Regulation and Policy. The OFT watchdogs role has helped the UK community to understand the importance of a better consumers regulation and policy.
The freedom that the Enterprise Act of 2002 offers consumer bodies to be structured as super complainants allows the consumer to maintain the proximity of contact between the consumers and the OFT. The Citizen Advice Bureau provides free information and advice to vulnerable consumers who encounter problems in accessing important policy information especially when assessing costs.
Certain consumers find it difficult to file their complaints because they cannot afford advocacy fees. The Water Voice or Consumer Water Council helps the consumer in accessing safe, pathogen free and clean water. Safe water benefits vulnerable consumers in sewage polluted areas, poor drained areas and areas experiencing underground leakages.
The good garage and auto mobile repair schemes have helped consumers in accessing better automobile services. People who do not have enough information on car servicing and maintenance, cost of purchase and repair can depend on the scheme for direction.
Recent invention in automobiles has been re-coded and appreciated as the consumers are availed with important information to earn their desired vehicles based on their willingness to buy and access the services. The policy assures the consumer of an efficient delivery system, resource policy and legislative measure. The Sale of Goods Act of 1979 facilitates efficiency of sales to the targeted consumer.
The act assures vulnerable consumers of the right sales. The act connects the consumer with producers thus enabling an effective network of business. Consumers who are usually exposed to diverse challenges on the kind of products or services to go for are offered a variety of options by the policy. The Unfair Contract Act of 1977 is a practical clause for the vulnerable and less experienced consumers.
The act teaches them about the importance of fair trade and competition. The principle of regulation engages the act in working to motivate rational regulation and industrial evaluation while maintaining safety of the consumers. The UKs policy generates economic momentum by prioritizing the consumer.
The consumer becomes the subject matter and point of interest of the market. The merger inscription ensures that consumers issues are incorporated in competition and merger enquiries. Alongside the super complaints docket, the merger works to check on market failure and opportunity cost.
EUs assistance to the vulnerable consumers
The European Policy and Regulation integrates a number of clauses and acts that are expected to be implemented and applied by all stakeholders. It is however noted that despite the acts and clauses, the EU has managed to produce little, or at a given point, no assistance to the vulnerable consumers. The commissions council has also done little to observe consumers protection regulations.
The Green Paper has been termed as just any other publication. Not many producers, manufacturers or suppliers are ready to comply with the clause. Certain manufacturers view the publication as a framework for developing top level consumer protection. The EU which is comprised of many member states experiences difficulty in running the policies because of the big number of its members.
Based on the members, the fair monitoring of markets and national consumer policies becomes a challenge, with unfair representation of commissioners and representatives. Many issues emerge and the consumers interests tend to diverge from the original intentions.
The provision of better education to consumers is one of the many policies that the EU tends to maintain but due to ignorance and little information; consumers become vulnerable due to lack of enough information. Health is important for all consumers and especially among the weak and malnourished ones. The European policy and regulation on consumer protection is mandated to maintain health and safety standards.
When it comes to work policies, construction workers tend to fear the medical cover because the policy and regulation does not include compensation especially if the accident is beyond the job scope. This fact delays the response awaited by the consumer.
The profiles of climatic action, energy and environment are sometimes a challenge and unfair to vulnerable consumers who may include the normal citizens, government members and non-governmental agents.
The provision on age and medical background of consumers in respect to drug and substance abuse has always been promoted in Europe with the set standards and regulations protecting consumers from exploitation and abuse. The commission in charge of safety creates awareness in social and public settings for individuals who are ready to be informed.
The youths are the most affected when it comes to drug and substance abuse with rising cases of addiction and crime. Suicide has also being linked to drug abuse or overdose.
Conclusion
The policies of e-commerce9 have not been favorably exploited. The vulnerable consumers involving individuals and groups are yet to experience the full force of E-commerce. Better and immediate regulations are needed to avail electronic exchange of both goods and services. Most consumers are ill informed when it comes to monetary and budgetary matters.
This kind of ignorance can bring about vulnerability to the consumers. The economic, monetary and budgetary clauses suggest the acquisition of economic power by the consumers in the future. The long procedures and formalities on monetary and budgetary policies may distract the consumers and consequently expose them to exploitation.
Countries from Africa, Asia and America prefer to buy things especially electronics and automobiles in Europe. In this regard, the policies employed by the UK and the entire world should protect the international consumer. The formulation of better and convenient policies can ensure that consumers are assured of a better, healthier, convenient and economically powerful market and trade.
Research should be conducted to find better policy frameworks within the EU and in the UK which can enhance consumer protection. Consumers have in the past been exploited by various states within the European region and this fact has led to the deterioration of economic standards in the region.
Various governments under the EU should allocate more funds towards creation of mechanisms that would eliminate cartels which have exploited innocent consumers for decades.
The initiative cannot however be realized if the EU member states do not demonstrate the will to safeguard the consumers in the European region. Whether the countries enforce the legislation or not is not an issue. The right legislation for consumer protection must first be established.
Footnotes
1 OFT refers to Office of Fair Trade. It is a legal entity that safeguards consumers from being exploited through economic policies
2 Consumer refers to an individual who buys goods and services for his own consumption
3 EU refers to the European Union
4 Vulnerable consumer refers to a consumer who is susceptible to exploitation
5 UK refers to the United Kingdom
6 The European consumer policy and regulation refers to a legislation that is used by states within the EU. The legislation outlines measures for the protection of consumers.
7 Face book is a type of an on-line social site that individuals subscribe to and become members. Once a member, an individual can meet other members on-line and access their personal information
8Twitter is a type of an on-line social site that individuals use in making comments about various issues happening in the local and international levels.
The consumer protection policy refers to the stipulated mechanism which gives the consumer the freedom to shop and enjoy various products within their establishments. For instance, the European Union (EU) policy and regulation offers freedom to customers or consumers linked to the European Community to operate freely and shop anywhere and to enjoy protection and price advantage and the supply of quality goods to them.
Vulnerable consumers refer to those that are exposed to unfair pricing systems, low quality products, limited consumer rights, inadequate access to information and the repression of speech. Vulnerable consumers may include normal buyers, organizations or individuals who are exposed to unfair consumer practices from the supplier, dealers, government or the representative unions.
According to the Consumer Protection Strategy of 2007 to 2013, the primary role of consumer protection is to enhance equal classes of protection and security within the EU. It also facilitates a rich integrated domestic market.
According to the EU, the objective of a good customer protection approach includes the ability to empower the consumer through the creation of a transparent market which can supply the consumer with a wide spectrum of options in terms of quality of prices of commodities. It is also the objective of the policy to safeguard the consumer from all risks and threats.
The Consumer Policy Strategy focuses on different priority areas that include favorable consumer protection policy, fair oversight of consumer market and state consumer policies, facilitating consumer policy through the establishment of market regulation tools and placing of customers at the helm of other EU policies.
The strategic policy is expected to inform and educate the consumers through integration of the practices of the EU centers. The UK, a member of the EU is bound by the directive of the domestic UK law.
The consumer protection claims are handled when the complaints are forwarded to the director general who deals with fair trade. It is however not easy for consumers to complain straight to the OFT1 and they have to employ a middleman. This study evaluates the European and UK policies of consumer protection. The essay will focus on the impact of fair, favorable or unfavorable policies on the consumers.
Background
Consumer protection constitutes laws and rules organized to facilitate consumers rights protection and ensure fair trade. It is also the role of the policy to safeguard the weak and vulnerable consumers. Consumers who cannot take care of themselves or who are afraid to take a step of claiming their rights have the advantage of obtaining anchorage from the consumer policy and regulation approaches.
The policy not only protects the consumers but also enlightens them on the various rights and existence of consumer support agencies. The agencies include Consumer Protection Organization, Federal Trade Commission, ombudsmen, business consultancies and government organizations.
A consumer2 is a person who procures goods and services for consumption or direct ownership. His aim is to keep or use the service or goods and not sell them.
Vulnerable clients
When a consumer is weak or not equipped enough to fight for his or her rights in respect to commodity prices; he or she is said to be vulnerable. Exploitative policies among the various nations under the EU have subjected consumers to inflation and sub-standard products and services for a long time. Efficient and effective legislation safeguards consumers against health risks and risks related to unnecessary expenses.
Weak consumers cannot file their complaints when faced with inappropriate services and low quality products from sellers and manufacturers. They are forced to buy and use what to them is substandard and inconvenient but due to the need for the particular commodity, they are forced to succumb to the demand and go on procuring it.
The EU3 and UK policies both outline measures for the consumer protection but not all are put into consideration especially when the issues are related to health, ethics and quality production.
Other types of vulnerable consumers comprise of those informed individuals who are always ready to fight and express their concerns but lack the intervention of a middleman or somebody who can represent them in the judicial system or at the high office for immediate action.
Vulnerable consumers4 may also include the normal buyers who buy essential commodities like food and clothing even if the prices are compromised. They are highly taxed and tend to pay extremely high to acquire the product differently from other consumers from different locations who use the same product.
The consumers may need to complain but the communication channels may be blocked by certain interested parties. The conditions can also become oppressive and inconvenient because of little intervention from the observers and other agencies under the EU. The observers can be government agencies, foreign experts and rights protection facilities.
Regulation and consumer policy
Proper regulation and consumer protection help both the consumer and the market to work more efficiently. The policies are usually concerned with advertising, complaints, mergers and competition, transparency, fairness and consumers rights. The consumer protection policy and regulation in Europe and the UK5 prioritize advertising as a move towards the creation of a competitive and fair market.
The advertising clause serves to improve information quality by maintaining responsible and appropriate standards. The EU Consumer Policy works towards enhancing the consumers concerns at the EU level and various issues are addressed through legislative processes. The clause on mergers ensures that all issues are evaluated in the merger or through competitive enquiries.
The principle of consumer regulation is usually responsible for facilitating sensible industrial regulation and evaluation with focus on ensuring consumer s rights regulation. The clause on super complaints deals with market failure and makes informed decisions by using the power of the super complaint network.
The consumers product safety approach assures the consumers the safety of given products and the authority to question safety standards and deceptive operations of the market.
The European consumer policy and regulation
The European consumer policy and regulation is a destination approach in terms of performance, structure and evaluation. The strategic approach focuses on the consumers rights in the market mechanisms. It stresses on a number of considerations. The approach considers the clause on fair consumer protection and regulation to be an efficient one in safeguarding consumers interests.
In this case, the Council Commission focuses on simplifying the laws by amending the major directives on consumer protection. The commissions responsibilities constitute the publishing and making of a Green Paper Publication on the evaluation of consumers protection. The commission necessitates harmonization towards an improved trend and facilitates an effective consumer protection strategy.
The approach by the European agency focuses on favorable redress and enforcement of the consumer protection laws. The consumer is mandated to monitor the state enforcement systems through surveying and close examining their performance. For an effective, fair and open market, the European consumer policy6 and regulation focuses on the fair evaluation of the consumer market.
It also monitors the national consumer policy. Market surveillance has been enforced through employment of devices such as RAPEX (Rapid Alert System) and also through cooperation from USA, China and other countries working together with the EU in ensuring the continued maintenance of consumer safety. The policy and regulation approach has always prioritized consumer protection.
The commissions responsibility is to ensure that the consumers access health, transport and industrial facilities. It also ensures that all products of general interest and global service at the EU level are protected. Education is crucial for the consumer and the European commission on consumer protection policy and regulation because it promotes information, sound decision making and awareness in the consumer.
The commission finances the initiative aimed at providing information to prospective consumers like actions by the European Consumer Center Network (ECC-Net). The commission also participates in campaigns in newly established member states. The consumer policy strategy of 2007 to 2013 aims at uniting the 27 national domestic markets to form the biggest retail market internationally.
In the wave of the latest expansion, Eurostat targets 495 million EU inhabitants. The prospects of e-commerce are not fully exploited. The consumer strategy is yet to be formulated by the commission. Reports on consumer expenditure show 58% rise in the EUs GDP.
Many considerations have in the past been made by the commission but at the moment, all units represented can be able to enjoy the advantage of the retail market with vulnerable groups especially the elderly risking being penalized.
The Green Paper Review on consumer acquisition stipulates that the operational consumer protection laws are based on little harmonization and permit member states to adopt a better formulated legislation. The Green Paper unveiled a public consultation forum which was later terminated in 2007.The forum focused on reviewing the consumer acquisition policy.
The forum proposed three options for the purpose of harmonization. The first option involved full harmonization of the policies on consumer protection. The second option incorporated little harmonization supported by a symbiotic recognition clause.
The third option integrated harmonization which involved the establishment of firms in the various member states; all complying with the rules and regulations applied in their states. The Green Paper proposes the reviewing of the main directives on consumer protection and the establishment of new consumer credit directives. The paper also adopted the drafts of two evaluation reports.
One was a directive on financial services and the other was about general product safety. The Commission for Health and Consumer Safety operates under the docket of the European Commission. The present commissioners post is occupied by Toni Brag. This docket is responsible for issues of public and animal health, food safety and the consumers welfare functions.
The policy by the commission on the promotion of warnings on smoking of tobacco has been an effective market approach towards public health stimulation. Progress has been realized and the commission has been able to address the issue of pictorial warnings. This fact has enabled a majority of the European nations to impose bans on public smoking.
This legislation was proposed by Marcos Kyprianon, head of Barossa Commission on the subject of health and consumer protection. In 2007, Commissioner Marcos unveiled a project that handled the short supply of organs donation within the EU. This plan involved promotion, donor cells and specially informed medical staff.
The various commissioners with remarkable adjustments include Richard Barco from Ireland (Jenkins Commission), Stanley Clinton from the UK (Delver Commission i), Grigoris Wafts from Greece (Deloris Commission ii), Christian Scrivener from France (Deloris Commission ii), Emma Boning from Italy (Santer Commission), David Bryne from Ireland (Pride Commission and John Dali from Malta (Barossa Commission).
The present portfolio of clauses and acts involves the president, vice president , director general of the agencies and legislative personnel.
The assembly portfolio involves agriculture and rural development, climate actions, competition panels, development schemes, digital agendas, economic affairs, monetary affairs, education and cultural networks, environment, financial programs and budgetary scheme, health and consumer policy, industry and entrepreneurship, international cooperation, humanitarian aid and crisis response and justice, citizenship and fundamental rights.
These entire parameters make the European Consumer Protection Unit what it is today.
UKs policy and regulation on consumer protection
The UK being a part of the EU is legally bound by the policies of the EU. The intervention of the EU law, the UK policy and regulations are emerging to be independent entities with different procedures and regulations to safeguard the consumers.
The UK tends to recognize the different areas that the EU has attempted to enforce the policy but failed and the UK has in the past made attempts to resuscitate it. In the different circumstances, especially where domestic laws are crucial, matters concerning consumer protection are usually evaluated and involve contract restitution tools or criminal laws.
The issues pertaining to consumers are configured and evaluated as complaints are forwarded to the general director in charge of air trade. Direct complaints from the consumer to the OFT are not allowed. An intermediary has to relay the complaint to the OFT. The intermediary provides legal information and advice to the respective complainant.
He can also decide to take the complaints to the trading standard for further evaluation. Following the restriction placed on the Enterprise Act 2012, uncollected complainants face the challenge of not knowing whether their complaints will be considered or not. This aspect becomes difficult for the individual consumers who are unable to access the outcome of their complaints.
The consumer can in certain circumstances forward large volumes of complaints to be evaluated systemically. The OFT is reported to be lenient and rarely takes companies to court but prefers slim touch regulation policies. The consumers complaints raised against the organization or company do not go through publication but pass through investigative work.
Certain consumer protection laws like the unfair stipulation of the Consumer Contract Regulation of 1999 or Distance Selling Regulation of 2000 were directives derived from the UK implementation. The OFT becomes responsible for enforcing this regulation.
However, these policies can lead to a problem considering that the legalization tackles individuals complaints and ignores systemic complaints from them. The OFT plays the role of the UKs official watchdog in respect to competition and consumer insights. It oversees the operations of the market at the local and international level through trading standards offices.
General advice on consumer operation can be drawn from the consumer docket or through the Citizens Advice Bureau Brand. The UK Policy and Regulation integrates several acts and clauses.
They include Sales of Good Act 1979, Unfair Contract Terms Act of1977, Consumer Protection Act of1987, Electronic Consumer Regulation of 2005, Consumer Protection Regulation of 2000, The Enterprise Act of 2002, Consumer Protection from Unfair Trading Regulation of 2008 and General Product Safety Regulation of 2005.
These acts have existed for a long time and have maintained the UKs dominance within the European community. These policies on consumer protection have affected many acts of parliament, government departments, statutory instruments lobby groups and citizens with the goal of facilitating a market economy that is fair. The policies ensure that consumers enjoy quality and safe goods and services.
The primary zones of regulating consumer matters include the product safety evaluation that protects people from buying potentially harmful goods. It ensures favorable terms for goods and services by elimination of unfair terms. It also includes financial regulation to facilitate credit access by ensuring that it is affordable.
The zone also requires that consumers fully understand the terms and obligations attached to loans and credit facilities. The other zone deals with strong competition especially from the private sector by elimination of cartels, destroying monopolies and dissolution of mergers.
Even though the UK is a part of the EUs internal market, it works alongside other countries from Europe and EU institutions by outlining and enforcing transitional policies. A lot of parties play different roles in the maintenance of the policies with respect to the established laws. Examples of them include the Bank of England, OFT, Financial Services Authority, Competition Commission and the European Commission.
The Consumer Advocacy Group is a crucial organization that maintains justice and transparency with respect to the consumers protection policies. The supposed super-complainant aims at empowering the consumers concerns. The consumers in this case become vulnerable by not having individual access to vital information. The information can form a basis of evaluating the market.
Eight types of advocacy groups have been structured since the year 2007 and they include CAMRA which is a lobbying cluster that deals with quality and nature of beer and the Citizens Advice Bureau which provides free legal advice and specific help on consumers rights in the UK.
Others include Water Voice, Consumer Direct, Post Watch and General Consumer Council of Northern Ireland, Good Garage Scheme and the National Consumer Council. The Consumer Association has tangible authority of taking action as envisaged by the Completion Act of1988. The association is a lobby assembly and is sponsored by subscription of regular consumers.
The street fundraising initiative that originates from charity mergers is usually an offensive and aggressive move that violates legislation and policies outlined by regulating agencies. Different acts facilitate different clauses and fields. For product safety, the Consumer Protection Act facilitates safety of both goods and services.
For finance and credit, the Consumer Credit Act of 1974, Financial Services Act of 2010, Financial Services and Market Act of 2010 and financial ombudsmen services facilitate monitoring policies. The Competition Act of 1998 and Enterprise Act of 2002 generate healthy and fair competition and practices.
UKs assistance to the vulnerable consumers
The UKs regulatory policy makes her a stronghold when it comes to consumer protection. The clause on fair trade allows individuals from England, Wales and other parts of UK to enjoy fair trade. Fair trade refers to a good pricing system, fair competition and market procedure. This act tends to empower the weak and depressed consumers as it gives them hope of justice and fairness.
The policies are able to outline what is unfair and inform the consumers on the current market structures. The product safety regulation clause protects consumers, general public and various stakeholders from using harmful products and services. For example the Tobacco Awareness Scheme is aimed at informing individuals with little or no information on tobacco and narcotics about the dangers of using drugs.
Customers or consumers benefit directly or indirectly from this clause. They benefit directly through information availability and indirectly through third parties. The financial regulation clause helps the less informed consumers and general public on financial services. The policy helps individuals to recognize the need for accessing realistic loans and credit facilities.
It is the mandate of the Consumer Protection Commission and Agency to facilitate fair monetary organizations and authentic signatories. Two types of consumers are found in the UK.They include those consumers who seek financial advice from established individuals and successive personalities and those who play the try and error technique. They latter operate by chance.
To them, financial gain is based on luck and previous experience. The consumer policy and regulation tends to address the needs of these consumers by creating educational programs in media and social communication networks like Face book7 and Tweeter8.The clause on competition policy and regulation within the private quarters helps in controlling cartels and fighting monopoly.
Monopoly has been a menace to the common consumers who have been subdued by the cartels in favor of certain individuals. They help in abolishing mergers that appear unfair and improperly constituted. The consumers are able to enjoy commodities The Consumer Policy and Regulation protects consumers from the freedom from monopoly and egocentric individuals.
The role played by the OFT has been a crucial one in solving consumers complaints through legal means. The OFT is able to speak for the weak, irresponsible and vulnerable consumers. The movement of the complaints from the OFT to the trading standards helps the organization to conduct comprehensive investigations.
The proximity focus by the OFT is to maintain links with its consumers through formation of small groups that act as a representatives of the consumer cycle. The groups are able to convey the complaints to the OFT. The OFTs nature of not prosecuting companies has been able to encourage different companies to solve their issues and consumer complaints amicably and responsibly.
Consumers are safeguarded from fear of facing prosecution; especially if it is a scheme that undermines the Consumer Regulation and Policy. The OFT watchdogs role has helped the UK community to understand the importance of a better consumers regulation and policy.
The freedom that the Enterprise Act of 2002 offers consumer bodies to be structured as super complainants allows the consumer to maintain the proximity of contact between the consumers and the OFT. The Citizen Advice Bureau provides free information and advice to vulnerable consumers who encounter problems in accessing important policy information especially when assessing costs.
Certain consumers find it difficult to file their complaints because they cannot afford advocacy fees. The Water Voice or Consumer Water Council helps the consumer in accessing safe, pathogen free and clean water. Safe water benefits vulnerable consumers in sewage polluted areas, poor drained areas and areas experiencing underground leakages.
The good garage and auto mobile repair schemes have helped consumers in accessing better automobile services. People who do not have enough information on car servicing and maintenance, cost of purchase and repair can depend on the scheme for direction.
Recent invention in automobiles has been re-coded and appreciated as the consumers are availed with important information to earn their desired vehicles based on their willingness to buy and access the services. The policy assures the consumer of an efficient delivery system, resource policy and legislative measure. The Sale of Goods Act of 1979 facilitates efficiency of sales to the targeted consumer.
The act assures vulnerable consumers of the right sales. The act connects the consumer with producers thus enabling an effective network of business. Consumers who are usually exposed to diverse challenges on the kind of products or services to go for are offered a variety of options by the policy. The Unfair Contract Act of 1977 is a practical clause for the vulnerable and less experienced consumers.
The act teaches them about the importance of fair trade and competition. The principle of regulation engages the act in working to motivate rational regulation and industrial evaluation while maintaining safety of the consumers. The UKs policy generates economic momentum by prioritizing the consumer.
The consumer becomes the subject matter and point of interest of the market. The merger inscription ensures that consumers issues are incorporated in competition and merger enquiries. Alongside the super complaints docket, the merger works to check on market failure and opportunity cost.
EUs assistance to the vulnerable consumers
The European Policy and Regulation integrates a number of clauses and acts that are expected to be implemented and applied by all stakeholders. It is however noted that despite the acts and clauses, the EU has managed to produce little, or at a given point, no assistance to the vulnerable consumers. The commissions council has also done little to observe consumers protection regulations.
The Green Paper has been termed as just any other publication. Not many producers, manufacturers or suppliers are ready to comply with the clause. Certain manufacturers view the publication as a framework for developing top level consumer protection. The EU which is comprised of many member states experiences difficulty in running the policies because of the big number of its members.
Based on the members, the fair monitoring of markets and national consumer policies becomes a challenge, with unfair representation of commissioners and representatives. Many issues emerge and the consumers interests tend to diverge from the original intentions.
The provision of better education to consumers is one of the many policies that the EU tends to maintain but due to ignorance and little information; consumers become vulnerable due to lack of enough information. Health is important for all consumers and especially among the weak and malnourished ones. The European policy and regulation on consumer protection is mandated to maintain health and safety standards.
When it comes to work policies, construction workers tend to fear the medical cover because the policy and regulation does not include compensation especially if the accident is beyond the job scope. This fact delays the response awaited by the consumer.
The profiles of climatic action, energy and environment are sometimes a challenge and unfair to vulnerable consumers who may include the normal citizens, government members and non-governmental agents.
The provision on age and medical background of consumers in respect to drug and substance abuse has always been promoted in Europe with the set standards and regulations protecting consumers from exploitation and abuse. The commission in charge of safety creates awareness in social and public settings for individuals who are ready to be informed.
The youths are the most affected when it comes to drug and substance abuse with rising cases of addiction and crime. Suicide has also being linked to drug abuse or overdose.
Conclusion
The policies of e-commerce9 have not been favorably exploited. The vulnerable consumers involving individuals and groups are yet to experience the full force of E-commerce. Better and immediate regulations are needed to avail electronic exchange of both goods and services. Most consumers are ill informed when it comes to monetary and budgetary matters.
This kind of ignorance can bring about vulnerability to the consumers. The economic, monetary and budgetary clauses suggest the acquisition of economic power by the consumers in the future. The long procedures and formalities on monetary and budgetary policies may distract the consumers and consequently expose them to exploitation.
Countries from Africa, Asia and America prefer to buy things especially electronics and automobiles in Europe. In this regard, the policies employed by the UK and the entire world should protect the international consumer. The formulation of better and convenient policies can ensure that consumers are assured of a better, healthier, convenient and economically powerful market and trade.
Research should be conducted to find better policy frameworks within the EU and in the UK which can enhance consumer protection. Consumers have in the past been exploited by various states within the European region and this fact has led to the deterioration of economic standards in the region.
Various governments under the EU should allocate more funds towards creation of mechanisms that would eliminate cartels which have exploited innocent consumers for decades.
The initiative cannot however be realized if the EU member states do not demonstrate the will to safeguard the consumers in the European region. Whether the countries enforce the legislation or not is not an issue. The right legislation for consumer protection must first be established.
Footnotes
1 OFT refers to Office of Fair Trade. It is a legal entity that safeguards consumers from being exploited through economic policies
2 Consumer refers to an individual who buys goods and services for his own consumption
3 EU refers to the European Union
4 Vulnerable consumer refers to a consumer who is susceptible to exploitation
5 UK refers to the United Kingdom
6 The European consumer policy and regulation refers to a legislation that is used by states within the EU. The legislation outlines measures for the protection of consumers.
7 Face book is a type of an on-line social site that individuals subscribe to and become members. Once a member, an individual can meet other members on-line and access their personal information
8Twitter is a type of an on-line social site that individuals use in making comments about various issues happening in the local and international levels.
The issue regarding the impact of the lead paint has already become one of the most discussed. A number of people in Maryland face the problem of poisoning that damages the brain and leads to severe consequences. The case with Freddy Gray and William Porter proves that the hazardous material can change people’s life and have a significant impact on the development of the nervous system. The major purpose of the paper is to provide the detailed policy analysis of the lead control policies that were passed in Maryland.
The problem of the lead paint poisoning is not new, although, the government took actions to solve it, it should be highlighted that the issue is urgent as the poisoning still affects children and adults living in the Maryland. First and foremost, it should be stated that the federal laws were created to protect people from the lead paint poisoning. Baltimore forbid the usage of the perilous material in 1950 (Wheeler & Broadwater, 2015b).
Nevertheless, the problem remained as the paint on old houses poisoned people who lived in half-destroyed houses. The key issue is that the lead poisoning impacts mostly poor blacks, who cannot afford to live in better conditions. The case with Gray and his sister proves that the dangerous level of the lead in blood plays a significant role not only in medical problems but also affects the reduction of school activity, aggressiveness, and behavioral disorders (Fletcher, 2013).
Despite the policies that aim to control the negative impact of the hazardous paint, some companies make money on people who suffer from this problem. Access Funding makes a profit from the grief of poor families living in terrible conditions with the perilous paint. However, it should be stressed that this company is not the single example of how companies make millions of dollars on the issue (McCoy, 2015). Access Funding buys future payments of poisoned people for the lower price, leaving people with no chance to go through the expansive checks of the level of the lead paint poisoning every month. Some of the victims become homeless or even die.
Legislative regulation
The Lead Paint Program, the Structured Settlement Protection Act, and Reduction of Lead Risk Housing Act were originally designed to solve the problem and reduce the negative impact of the lead paint on the health (McCoy, 2015). However, the law is not followed strictly. According to Brian Brown, the lawyer, the pivotal issue is that most of the victims are blacks and “if rich white kids were getting poisoned, there would be a law on the books that says ‘No lead in houses” (Wheeler & Broadwater, 2015b). According to the Lead Paint Law, the properties that are used for rent should be checked every year. Despite this fact, the owners do not pay attention to registration. MDE officials claim that the lack of the employees is a fundamental factor that makes the checking system to be impossible.
Less than ten workers should register more than 400,000 of the houses and apartments for rent, this seems to be impossible. The other side of the problem is that a number of rental units are not on the list for registration. This creates the prolific environment for the owners to make money acting against the law. According to the law, the owner of the rental unit is supposed to get rid of the perilous materials before the tenant starts to live in the house. Landlords should provide the tenant with the certificate that the rental unit does not have any lead danger. In addition, the owner of the property is supposed to provide the tenant with the detailed information on how to protect children in case of any danger. The small amount of the lead paint is enough for the child to receive the high level of poisoning.
Government funding
Understanding the significance of the problem, the government stresses that the issue received the priority. The impressive sum of money from the federal and state budget will help to repair more than 200 houses and eliminate the lead paint danger. Almost 40,000 children were affected by the lead paint poison for the last ten years (Wheeler & Broadwater, 2015a). The impact of the hazardous material has a dramatic effect on the future life and development of the child, Ruth Ann Norton states:
I don’t know what Freddie Gray did between the ages of 3 and 25, but if he had been able to read well, had gone to school, if his family was not just fleeing from one house to another, the likelihood of him not being on that corner would have been a whole lot better. There is a bill to pay because we neglect (Wheeler & Broadwater, 2015a).
The general assembly aims to make paint manufacturers responsible for the lead poisoning of children. However, it should be stressed that the implementation of this statement meets certain obstacles. First of all, it is almost impossible to distinguish what type of paint of what manufacturer was used to damage the human’s health. In case it is possible to determine the manufacturer, the family can sue and receive the compensation for the harm.
One of the ways out of the problem, according to the experts, is the increasing of the financing of the property owners who cannot deal with the problem alone and creating new workplaces for the inspectors to register the rental units and check the houses on the presence of the hazardous lead paint. Ruth Ann Norton states that the Department of Housing and Urban Development in the United States developed the policy that aims to hire people to make checks every year and help landlords to protect their property from the influence of the lead paint poisoning. However, the increasing of the financing will not eliminate the problem, as the solution demands the increasing of the number of the inspectors as well and contribution to understanding that lead paint is a significant issue that impacts the life in an adverse way.
Conclusion
In conclusion, it should be pointed out that the issue regarding the lead paint poisoning is urgent and needs to be solved as soon as possible. Living in a house with the hazardous material can destroy the life. Aggressive and abusive behavior, poor academic success, and medical problems are the key factors that show the negative impact of the lead paint on children. The high index of criminal activity can be explained by the usage of the hazardous material. The lead paint damages the brain and transforms the person. The problem demands the solution as children should not suffer because of the financial difficulties, Gary and other poisoned children could have better and different life. One should not forget the dramatic consequences of the lead paint usage, and that is, several political decisions should be made to eliminate the problem.
References
Fletcher, M. (2015). Freddie Gray and William Porter: Two Sons of Baltimore Whose Lives Collided. The Washington Post. Web.
McCoy, T. (2015). How Companies Make Millions off Lead-Poisoned, Poor Blacks. The Washington Post. Web.
Wheeler, T., & Broadwater, L. (2015a). Lead paint: Despite progress, hundreds of Maryland children still poisoned. The Baltimore Sun. Web.
Wheeler, T., & Broadwater, L. (2015b). Lawmakers, activists call for better enforcement of Md. lead-paint laws. The Baltimore Sun. Web.
There are several ways to define the phenomenon; traditionally, the Coase Theorem is identified as the statement that “in the absence of government authority, the private sector will step in to provide alternative services, depending on the transaction costs” (Skousen, 2013, p. 454). As a matter of fact, it is common knowledge that Coase himself was against the simplified interpretation of his theorem, claiming that the transaction costs can be disregarded, the simplified version went against what Coase was trying to get across (Farber, 1997). According to the author, the theorem was supposed to prove that on no account could the transactional costs be dismissed (Skousen, 2013).
Thesis statement
Since, according to the Coase Theorem, the economic efficiency of a company is highly dependent on the so-called externalities, which are, in their turn, often relocated by the government, it is imperative that private property rights should be defined as precisely as possible, which makes the definition of the aforementioned rights the key to successful entrepreneurship.
Coase Theorem and Governmental Regulation: Alternative Solutions
The Coase theorem does not only stress the necessity to refrain from the traditional concept of governmental regulation of private companies and their transactions but also suggests an alternative for modern SMEs to comply with. However, Coase does not suggest that the influence of the government should be eliminated completely; instead, Coase offers the scenario, in which the government should coordinate the transaction costs by driving them to zero. This can be achieved by introducing new institutions into the market. In other words, the government should coordinate the externalities, according to Coase (Skousen, 2013).
Delineation of Property Rights and the Following Benefits
As has been explained above, the definition of the property plays a major part in the creation of a proper environment for SMEs, according to the Coase Theorem. Yet, apart from the location of the phenomenon of property, the delineation of its rights is also imperative for proving the importance of transaction costs, as Coase explained. According to what Skousen says, resources should be measured in terms of individual activities within the private entrepreneurship field (Skousen, 2013). As a result, the owners of SMEs will be able to enjoy more freedom in terms of their financial transactions and enter the global market without suffering as many costs as they are subjected to once the government has the ultimate control over the key externalities.
Conclusion: Coase Theorem and its Plausibility
One must admit that, as a concept, the Coase Theorem works perfectly well. The idea of reducing the power that the state government has over the market and private entrepreneurs sounds very reasonable. More to the point, it is crucial that the Coase Theorem does not take the government out of the picture entirely – quite on the contrary, the author suggests that it should play a very specific role in the market economy by executing control over the existing externalities.
However, one must also keep in mind that, like many other theories, the Coase Theorem views the concept of private entrepreneurship within the realm of the global economy from a slight idealist perspective (Skousen, 2013). Nevertheless, the theorem provides a viable solution to the problem that has been brewing for quite long and hindering the progress of private entrepreneurship for both SMEs and large companies all over the world.
Reference List
Farber, D. A. (1997). Parody lost/pragmatism regained: The ironic history of the Coase theorem. Virginia Law review, 83(2), 397–428. Web.
The quick escalation of the health issue, specifically, the management of the COVID-19 epidemic and its quick rise to the scale of a pandemic have defined the further choice of government policies. The focus on controlling the spread of the disease, at the same time increasing awareness among the target population members and convincing them to accept the danger as a real one have been prioritized. However, despite the efforts of the U.S. government authorities, the measures undertaken so far seem to have been failing given the spike in the number of people developing the symptoms of COVID-19, as well as the mortality rates among the infected population.1 Therefore, the discussion of the policy and the role that the government plays in controlling citizens and its own actions, is long overdue. Despite the attempts at safeguarding its citizens, the U.S. government has ben failing miserably with the establishment of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act due to the lack of control over the attitudes and behaviors of citizens and the efficacy of its own actions.
The observed tragic trend meets the expectations set by James Madison in his famous statement in Federalist. To trace the causes of the problem, one will need to consider the mechanisms of policymaking. When creating productive and effective policies, one needs to bear in mind that most people are very flawed and lacking awareness and that regulations and policies are also designed and implemented by fallible human beings. Remarkably, the quotation above also discloses the controversial nature of policies, possibly implying that the creation of an impeccable regulation followed by every citizen is impossible. By establishing the fact that people are prone to making mistakes and lapses in judgment, Madison suggests that no policy will ever be effective enough to reach the expected objectives and deliver the required results, attaining the 100% rates of compliance.
Moreover, Madison’s argument can also be interpreted as the impossibility of reaching complete understanding between the intentions of the government and the response of the citizens. Indeed, if policies are meant to be designed by people with inherent flaws, misconceptions, and even prejudices that will meddle with their ability to introduce unbiased regulations, the threat of citizens failing to comply with the said policies either intentionally or from a genuine place of misunderstanding will always exist. The latter presumption proves particularly correct when considering how the CARES policy for managing the pandemic of coronavirus has been handled and received.2
The observations above do not imply that the CARES policy was completely inefficient or pointless; quite the contrary, there are numerous indications of its positive effects on the well-being and the overall health management rates within the American community. Specifically, the recent study on the subject at hand has shown that the introduction of the CARES act has contributed to the increase in the accessibility of care.3 However, the specified effects still exist largely in theory since the CARES Act has not been fully implemented, and the scope of its effects has not yet reached the size that allows making long-lasting judgments concerning the efficacy of the policy and the extent to which the government has managed to embrace the needs of every single group within the U.S. community.
The existing data also shows that Madison’s assumptions prove to be disastrously correct for the current policies regarding the issue of COVID-19, namely, the CARES regulation. In its nature, the act was supposed to safeguard the rights of vulnerable groups first. The specified denizens of the U.S. population should have included the indigenous population primarily, as the CARES Act clarifies.4 However, when considering the implications of the specified policy, one will realize that the policy was significantly mismanaged due to the lack of awareness about the needs of marginalized groups and vulnerable populations, specifically, indigenous people.
In addition, the fact that the current policy fails to acknowledge the tensions within the relationships between the U.S. authorities and the indigenous populations of North America also warrants discussion. According to van Dorn, Cooney, and Sabin, “The deep history of injustice by the US government towards these people means that the US response will be looked on with suspicion.”5 Therefore, the policy in question demonstrates Madison’s argument and proves it in its entirety, pointing to the fact that the lack of control over the population and the management of its needs, leads to a drastic failure of a policy. Drastically low levels of awareness among government members concerning the said needs have also contributed to the poor design and implementation of the policy.
Overall, the problem of reconciling democracy, political power, and the extent to which the government is willing to represent its population and the opportunities that it takes to exert its power can be seen in the CARES policy. Although the U.S. government has a plethora of opportunities for studying the needs of vulnerable groups and the existing opportunities for meeting the needs in question, the range of steps that the U.S. authorities have taken so far appears to be insufficient for safeguarding the specified groups. Specifically, although offering a semblance of support, the CARES Act leaves indigenous American groups vulnerable to the COVID-19 pandemic by leaving the level of access comparatively low for the specified communities.
In turn, the CARES Act has also proven the second part of the assumption made by Madison, namely, the idea that policies re always doomed to be mismanaged at least slightly due to incompliance among general audiences. The CARES Act is one of the most recent examples of the specified argument as the extent of readiness with which people are likely to approach the requirements set in the CARES Act are very low presently.6 The observed issue can be explained from the perspective of trust, or, to be more accurate, the lack thereof, between the government and the citizens. As a result of misinformation in social media, as well as the government’s failed attempt at controlling the spread of false data, a large portion of U.S. citizens has been misinformed, which can be seen as a major failure of the policy in question.
Madison’s argument about the need to establish tighter control standards, particularly, in regard to ensuring the awareness of the government and the compliance of the population, is doubtless. Although there are multiple nuances to the specified argument, as the case of meeting the needs of native representatives of the American population has shown, the general concept of creating an effective communication channel remains a viable solution to the problem. Consequently, Madison’s statement concerning the problem of control within the existing governmental structures, including the external and internal controlling issues, remain viable even in the present-day settings, as the case of CARES Act as the tool for managing COVID-19 shows.
The issue that Madison addresses, namely, the reconciliation of the huge amount of power that political figures hold and the necessity for them to act on the principles of democracy can be managed by introducing a greater range of control over the choices that the said state authorities make. Namely, the public involvement in the political agenda and the development of policies needs to be increased.
The issue of transparency as one of the main premises for addressing Madison’s dilemma also needs to be discussed. Although James Madison was entirely correct in his assumption that the government lacked the control over citizens, as well as over its own actions and decisions, as the recent policy regarding the COVID-019 issue has shown, there are still some strategies that can potentially help in addressing the concern in question. Specifically the reinforcement of transparency in regard to the choices that the state authorities make and the motivations behind the said actions will have to be made available to the public.
The issue of representation is another key problem that has led to the confirmation of Madison’s argument, as the CARES Act has indicated. Namely, the inconsistent dialogue between the U.S. government and the Native ethnic groups has led to the poor implementation of the policy and the failure to manage the health-related needs of the said vulnerable populations. The issue of health literacy, specifically, its low rates, and the lack of access to services such as tests for coronavirus have been affecting the well-being of Native ethnic groups in the U.S. severely.7 Therefore, in accordance with Madison’s theory, the dialogue between the government and the specified populations needs to be established so that the latter could be represented properly and that their needs could be met. As a result, the future policy for managing the issue of COVID-19 and providing the American population with the needed services will be handled with greater success.
However, it would be a mistake to presume that the issue of failing to embrace the needs of the target groups is completely unsolvable. Though taking every minute detail into account is barely possible, the U.S. government could collect more data on the factors that lead to reduced access to healthcare services for vulnerable groups, primarily, native Americans and other indigenous cultures. It is believed that high poverty levels and low extent of healthcare literacy are the primary causes of the observed phenomenon; however, further research into the subject matter will still be required. Remarkably, the opportunities for improved communication that the recent technological innovations have provided could be used to address the problem outlined by Madison in his famous statement. By including innovative tools for the promotion of mass health literacy and the eradication of COVID-related myths, the U.S. government will be able to increase the levels of compliance with the improved policy aimed at safeguarding the well-being of U.S. citizens.
With the introduction of the measures described above, the dilemma described by Madison will be resolved, at least, in the context of the current coronavirus crisis and the CARES Act. Thus, the assumption that the government policies will always remain inherently flawed will be proven wrong. However, until then, the argument posited by Madison and implying that the government’s decisions and policies will be inevitably misaligned with the needs of the population due to the lack of information and the presence of self-interest will remain true.
Bibliography
Boccia, Romina, Lindsey Burke, PhD, David R. Burton, Rachel Greszler, Adam Michel, Norbert J. Michel, PhD, Jude Schwalbach, Parker Sheppard, PhD, and Paul Winfree, “Congress Should Focus on Pandemic Control and Fix the CARES Act for an Economic Rebound,” Institute for Economic Freedom, vol. 3484, 2020, pp. 1-14.
Colenda, Christopher C., William B. Applegate, Burton V. Reifler, and Dan G. Blazer, II, “COVID-19: Financial Stress Test for Academic Medical Centers.” Academic Medicine, vol. 95, no. 6, 2020, pp. 1-11.
Erwin, Cheryl, Julie Aultman, Tom Harter, Judy Illes and Rabbi Claudio J. Kogan. “Rural and Remote Communities: Unique Ethical Issues in the COVID-19 Pandemic.” The American Journal of Bioethics, vol. 1, no. 1, 2020, pp. 1-8.
King, Jaime S. “Covid-19 and the Need for Health Care Reform.” New England Journal of Medicine, vol. 1, no. 1, 2020, pp. 1-10.
Maier, Charles S., and Ian Kumekawa. “Responding to COVID-19: Think through the Analogy of War.” Edmond J. Safra Center for Ethics White Paper, vol. 10, 2020, pp. 1-18.
Vaccaro, Alexander R., Charles L. Getz, Bruce E. Cohen, Brian J. Cole and Chester J. Donnally, III, “Practice Management During the COVID-19 Pandemic,” The Journal of the American Academy of Orthopaedic Surgeons, vol. 1, no. 2230, 2020, pp. 1-12.
Van Dorn, Aaron, Rebecca E. Cooney, and Miriam L. Sabin. “COVID-19 exacerbating inequalities in the US.” The Lancet, vol. 395, no. 10232, 2020, pp. 1243-1244.
Footnotes
Romina Boccia, Lindsey Burke, PhD, David R. Burton, Rachel Greszler, Adam Michel, Norbert J. Michel, PhD, Jude Schwalbach, Parker Sheppard, PhD, and Paul Winfree, “Congress Should Focus on Pandemic Control and Fix the CARES Act for an Economic Rebound,” Institute for Economic Freedom, vol. 3484 (2020): 3.
Jaime S. King, “Covid-19 and the Need for Health Care Reform,” New England Journal of Medicine, vol. 1, no. 1, 2020, p. 4.
Christopher C. Colenda, William B. Applegate, Burton V. Reifler, and Dan G. Blazer, II, “COVID-19: Financial Stress Test for Academic Medical Centers,” Academic Medicine, vol. 95, no. 6, 2020, p. 2.
Charles S. Maier, and Ian Kumekawa, “Responding to COVID-19: Think through the Analogy of War,” Edmond J. Safra Center for Ethics White Paper, vol. 10 (2020): p. 3.
Aaron van Dorn, Rebecca E Cooney, and Miriam L Sabin, “COVID-19 Exacerbating Inequalities in the US,” The Lancet, vol. 395, no. 10232, 2020, p. 1243.
Cheryl Erwin, Julie Aultman, Tom Harter, Judy Illes and Rabbi Claudio J. Kogan, “Rural and Remote Communities: Unique Ethical Issues in the COVID-19 Pandemic,” The American Journal of Bioethics, vol. 1, no. 1 (2020): p. 2.
Alexander R. Vaccaro, Charles L. Getz, Bruce E. Cohen, Brian J. Cole and Chester J. Donnally, III, “Practice Management During the COVID-19 Pandemic,” The Journal of the American Academy of Orthopaedic Surgeons, vol. 1, no. 2230, 2020, p. 2.
The consumer protection policy refers to the stipulated mechanism which gives the consumer the freedom to shop and enjoy various products within their establishments. For instance, the European Union (EU) policy and regulation offers freedom to customers or consumers linked to the European Community to operate freely and shop anywhere and to enjoy protection and price advantage and the supply of quality goods to them.
Vulnerable consumers refer to those that are exposed to unfair pricing systems, low quality products, limited consumer rights, inadequate access to information and the repression of speech. Vulnerable consumers may include normal buyers, organizations or individuals who are exposed to unfair consumer practices from the supplier, dealers, government or the representative unions.
According to the Consumer Protection Strategy of 2007 to 2013, the primary role of consumer protection is to enhance equal classes of protection and security within the EU. It also facilitates a rich integrated domestic market.
According to the EU, the objective of a good customer protection approach includes the ability to empower the consumer through the creation of a transparent market which can supply the consumer with a wide spectrum of options in terms of quality of prices of commodities. It is also the objective of the policy to safeguard the consumer from all risks and threats.
The Consumer Policy Strategy focuses on different priority areas that include favorable consumer protection policy, fair oversight of consumer market and state consumer policies, facilitating consumer policy through the establishment of market regulation tools and placing of customers at the helm of other EU policies.
The strategic policy is expected to inform and educate the consumers through integration of the practices of the EU centers. The UK, a member of the EU is bound by the directive of the domestic UK law.
The consumer protection claims are handled when the complaints are forwarded to the director general who deals with fair trade. It is however not easy for consumers to complain straight to the OFT1 and they have to employ a middleman. This study evaluates the European and UK policies of consumer protection. The essay will focus on the impact of fair, favorable or unfavorable policies on the consumers.
Background
Consumer protection constitutes laws and rules organized to facilitate consumers’ rights protection and ensure fair trade. It is also the role of the policy to safeguard the weak and vulnerable consumers. Consumers who cannot take care of themselves or who are afraid to take a step of claiming their rights have the advantage of obtaining anchorage from the consumer policy and regulation approaches.
The policy not only protects the consumers but also enlightens them on the various rights and existence of consumer support agencies. The agencies include Consumer Protection Organization, Federal Trade Commission, ombudsmen, business consultancies and government organizations.
A consumer2 is a person who procures goods and services for consumption or direct ownership. His aim is to keep or use the service or goods and not sell them.
Vulnerable clients
When a consumer is weak or not equipped enough to fight for his or her rights in respect to commodity prices; he or she is said to be vulnerable. Exploitative policies among the various nations under the EU have subjected consumers to inflation and sub-standard products and services for a long time. Efficient and effective legislation safeguards consumers against health risks and risks related to unnecessary expenses.
Weak consumers cannot file their complaints when faced with inappropriate services and low quality products from sellers and manufacturers. They are forced to buy and use what to them is substandard and inconvenient but due to the need for the particular commodity, they are forced to succumb to the demand and go on procuring it.
The EU3 and UK policies both outline measures for the consumer protection but not all are put into consideration especially when the issues are related to health, ethics and quality production.
Other types of vulnerable consumers comprise of those informed individuals who are always ready to fight and express their concerns but lack the intervention of a ‘middleman’ or somebody who can represent them in the judicial system or at the high office for immediate action.
Vulnerable consumers4 may also include the normal buyers who buy essential commodities like food and clothing even if the prices are compromised. They are highly taxed and tend to pay extremely high to acquire the product differently from other consumers from different locations who use the same product.
The consumers may need to complain but the communication channels may be “blocked” by certain interested parties. The conditions can also become oppressive and inconvenient because of little intervention from the observers and other agencies under the EU. The observers can be government agencies, foreign experts and rights’ protection facilities.
Regulation and consumer policy
Proper regulation and consumer protection help both the consumer and the market to work more efficiently. The policies are usually concerned with advertising, complaints, mergers and competition, transparency, fairness and consumers’ rights. The consumer protection policy and regulation in Europe and the UK5 prioritize advertising as a move towards the creation of a competitive and fair market.
The advertising clause serves to improve information quality by maintaining responsible and appropriate standards. The EU Consumer Policy works towards enhancing the consumers’ concerns at the EU level and various issues are addressed through legislative processes. The clause on mergers ensures that all issues are evaluated in the merger or through competitive enquiries.
The principle of consumer regulation is usually responsible for facilitating sensible industrial regulation and evaluation with focus on ensuring consumer s’ rights regulation. The clause on super complaints deals with market failure and makes informed decisions by using the power of the super complaint network.
The consumer’s product safety approach assures the consumers the safety of given products and the authority to question safety standards and deceptive operations of the market.
The European consumer policy and regulation
The European consumer policy and regulation is a destination approach in terms of performance, structure and evaluation. The strategic approach focuses on the consumers’ rights in the market mechanisms. It stresses on a number of considerations. The approach considers the clause on fair consumer protection and regulation to be an efficient one in safeguarding consumers’ interests.
In this case, the Council Commission focuses on simplifying the laws by amending the major directives on consumer protection. The commission’s responsibilities constitute the publishing and making of a Green Paper Publication on the evaluation of consumers’ protection. The commission necessitates harmonization towards an improved trend and facilitates an effective consumer protection strategy.
The approach by the European agency focuses on favorable redress and enforcement of the consumer protection laws. The consumer is mandated to monitor the state enforcement systems through surveying and close examining their performance. For an effective, fair and open market, the European consumer policy6 and regulation focuses on the fair evaluation of the consumer market.
It also monitors the national consumer policy. Market surveillance has been enforced through employment of devices such as RAPEX (Rapid Alert System) and also through cooperation from USA, China and other countries working together with the EU in ensuring the continued maintenance of consumer safety. The policy and regulation approach has always prioritized consumer protection.
The commission’s responsibility is to ensure that the consumers access health, transport and industrial facilities. It also ensures that all products of general interest and global service at the EU level are protected. Education is crucial for the consumer and the European commission on consumer protection policy and regulation because it promotes information, sound decision making and awareness in the consumer.
The commission finances the initiative aimed at providing information to prospective consumers like actions by the European Consumer Center Network (ECC-Net). The commission also participates in campaigns in newly established member states. The consumer policy strategy of 2007 to 2013 aims at uniting the 27 national domestic markets to form the biggest retail market internationally.
In the wave of the latest expansion, Eurostat targets 495 million EU inhabitants. The prospects of e-commerce are not fully exploited. The consumer strategy is yet to be formulated by the commission. Reports on consumer expenditure show 58% rise in the EU’s GDP.
Many considerations have in the past been made by the commission but at the moment, all units represented can be able to enjoy the advantage of the retail market with vulnerable groups especially the elderly risking being penalized.
The Green Paper Review on consumer acquisition stipulates that the operational consumer protection laws are based on little harmonization and permit member states to adopt a better formulated legislation. The Green Paper unveiled a public consultation forum which was later terminated in 2007.The forum focused on reviewing the consumer acquisition policy.
The forum proposed three options for the purpose of harmonization. The first option involved full harmonization of the policies on consumer protection. The second option incorporated little harmonization supported by a symbiotic recognition clause.
The third option integrated harmonization which involved the establishment of firms in the various member states; all complying with the rules and regulations applied in their states. The Green Paper proposes the reviewing of the main directives on consumer protection and the establishment of new consumer credit directives. The paper also adopted the drafts of two evaluation reports.
One was a directive on financial services and the other was about general product safety. The Commission for Health and Consumer Safety operates under the docket of the European Commission. The present commissioner’s post is occupied by Toni Brag. This docket is responsible for issues of public and animal health, food safety and the consumers’ welfare functions.
The policy by the commission on the promotion of warnings on smoking of tobacco has been an effective market approach towards public health stimulation. Progress has been realized and the commission has been able to address the issue of pictorial warnings. This fact has enabled a majority of the European nations to impose bans on public smoking.
This legislation was proposed by Marcos Kyprianon, head of Barossa Commission on the subject of health and consumer protection. In 2007, Commissioner Marcos unveiled a project that handled the short supply of “organs’ donation” within the EU. This plan involved promotion, donor cells and specially informed medical staff.
The various commissioners with remarkable adjustments include Richard Barco from Ireland (Jenkins Commission), Stanley Clinton from the UK (Delver Commission i), Grigoris Wafts from Greece (Deloris Commission ii), Christian Scrivener from France (Deloris Commission ii), Emma Boning from Italy (Santer Commission), David Bryne from Ireland (Pride Commission and John Dali from Malta (Barossa Commission).
The present portfolio of clauses and acts involves the president, vice president , director general of the agencies and legislative personnel.
The assembly portfolio involves agriculture and rural development, climate actions, competition panels, development schemes, digital agendas, economic affairs, monetary affairs, education and cultural networks, environment, financial programs and budgetary scheme, health and consumer policy, industry and entrepreneurship, international cooperation, humanitarian aid and crisis response and justice, citizenship and fundamental rights.
These entire parameters make the European Consumer Protection Unit what it is today.
UK’s policy and regulation on consumer protection
The UK being a part of the EU is legally bound by the policies of the EU. The intervention of the EU law, the UK policy and regulations are emerging to be independent entities with different procedures and regulations to safeguard the consumers.
The UK tends to recognize the different areas that the EU has attempted to enforce the policy but failed and the UK has in the past made attempts to resuscitate it. In the different circumstances, especially where domestic laws are crucial, matters concerning consumer protection are usually evaluated and involve contract restitution tools or criminal laws.
The issues pertaining to consumers are configured and evaluated as complaints are forwarded to the general director in charge of air trade. Direct complaints from the consumer to the OFT are not allowed. An intermediary has to relay the complaint to the OFT. The intermediary provides legal information and advice to the respective complainant.
He can also decide to take the complaints to the trading standard for further evaluation. Following the restriction placed on the Enterprise Act 2012, uncollected complainants face the challenge of not knowing whether their complaints will be considered or not. This aspect becomes difficult for the individual consumers who are unable to access the outcome of their complaints.
The consumer can in certain circumstances forward large volumes of complaints to be evaluated systemically. The OFT is reported to be lenient and rarely takes companies to court but prefers “slim” touch regulation policies. The consumers’ complaints raised against the organization or company do not go through publication but pass through investigative work.
Certain consumer protection laws like the unfair stipulation of the Consumer Contract Regulation of 1999 or Distance Selling Regulation of 2000 were directives derived from the UK implementation. The OFT becomes responsible for enforcing this regulation.
However, these policies can lead to a problem considering that the legalization tackles individual’s complaints and ignores systemic complaints from them. The OFT plays the role of the UK’s official “watchdog” in respect to competition and consumer insights. It oversees the operations of the market at the local and international level through trading standards offices.
General advice on consumer operation can be drawn from the consumer docket or through the Citizens’ Advice Bureau Brand. The UK Policy and Regulation integrates several acts and clauses.
They include Sales of Good Act 1979, Unfair Contract Terms Act of1977, Consumer Protection Act of1987, Electronic Consumer Regulation of 2005, Consumer Protection Regulation of 2000, The Enterprise Act of 2002, Consumer Protection from Unfair Trading Regulation of 2008 and General Product Safety Regulation of 2005.
These acts have existed for a long time and have maintained the UK’s dominance within the European community. These policies on consumer protection have affected many acts of parliament, government departments, statutory instruments’ lobby groups and citizens with the goal of facilitating a market economy that is fair. The policies ensure that consumers enjoy quality and safe goods and services.
The primary zones of regulating consumer matters include the product safety evaluation that protects people from buying potentially harmful goods. It ensures favorable terms for goods and services by elimination of unfair terms. It also includes financial regulation to facilitate credit access by ensuring that it is affordable.
The zone also requires that consumers fully understand the terms and obligations attached to loans and credit facilities. The other zone deals with strong competition especially from the private sector by elimination of cartels, destroying monopolies and dissolution of mergers.
Even though the UK is a part of the EU’s internal market, it works alongside other countries from Europe and EU institutions by outlining and enforcing transitional policies. A lot of parties play different roles in the maintenance of the policies with respect to the established laws. Examples of them include the Bank of England, OFT, Financial Services Authority, Competition Commission and the European Commission.
The Consumer Advocacy Group is a crucial organization that maintains justice and transparency with respect to the consumers’ protection policies. The supposed super-complainant aims at empowering the consumer’s concerns. The consumers in this case become vulnerable by not having individual access to vital information. The information can form a basis of evaluating the market.
Eight types of advocacy groups have been structured since the year 2007 and they include CAMRA which is a lobbying cluster that deals with quality and nature of beer and the Citizens Advice Bureau which provides free legal advice and specific help on consumers’ rights in the UK.
Others include Water Voice, Consumer Direct, Post Watch and General Consumer Council of Northern Ireland, Good Garage Scheme and the National Consumer Council. The Consumer Association has tangible authority of taking action as envisaged by the Completion Act of1988. The association is a lobby assembly and is sponsored by subscription of regular consumers.
The street fundraising initiative that originates from charity mergers is usually an offensive and aggressive move that violates legislation and policies outlined by regulating agencies. Different acts facilitate different clauses and fields. For product safety, the Consumer Protection Act facilitates safety of both goods and services.
For finance and credit, the Consumer Credit Act of 1974, Financial Services Act of 2010, Financial Services and Market Act of 2010 and financial ombudsmen services facilitate monitoring policies. The Competition Act of 1998 and Enterprise Act of 2002 generate healthy and fair competition and practices.
UK’s assistance to the vulnerable consumers
The UK’s regulatory policy makes her a stronghold when it comes to consumer protection. The clause on fair trade allows individuals from England, Wales and other parts of UK to enjoy fair trade. Fair trade refers to a good pricing system, fair competition and market procedure. This act tends to empower the weak and depressed consumers as it gives them hope of justice and fairness.
The policies are able to outline what is unfair and inform the consumers on the current market structures. The product safety regulation clause protects consumers, general public and various stakeholders from using harmful products and services. For example the Tobacco Awareness Scheme is aimed at informing individuals with little or no information on tobacco and narcotics about the dangers of using drugs.
Customers or consumers benefit directly or indirectly from this clause. They benefit directly through information availability and indirectly through third parties. The financial regulation clause helps the less informed consumers and general public on financial services. The policy helps individuals to recognize the need for accessing realistic loans and credit facilities.
It is the mandate of the Consumer Protection Commission and Agency to facilitate fair monetary organizations and authentic signatories. Two types of consumers are found in the UK.They include those consumers who seek financial advice from established individuals and successive personalities and those who play the ‘try and error’ technique. They latter operate by chance.
To them, financial gain is based on luck and previous experience. The consumer policy and regulation tends to address the needs of these consumers by creating educational programs in media and social communication networks like Face book7 and Tweeter8.The clause on competition policy and regulation within the private quarters helps in controlling cartels and fighting monopoly.
Monopoly has been a menace to the common consumers who have been subdued by the cartels in favor of certain individuals. They help in abolishing mergers that appear unfair and improperly constituted. The consumers are able to enjoy commodities The Consumer Policy and Regulation protects consumers from the freedom from monopoly and egocentric individuals.
The role played by the OFT has been a crucial one in solving consumers’ complaints through legal means. The OFT is able to speak for the weak, irresponsible and vulnerable consumers. The movement of the complaints from the OFT to the trading standards helps the organization to conduct comprehensive investigations.
The proximity focus by the OFT is to maintain links with its consumers through formation of small groups that act as a representatives of the consumer cycle. The groups are able to convey the complaints to the OFT. The OFT’s nature of not prosecuting companies has been able to encourage different companies to solve their issues and consumer complaints amicably and responsibly.
Consumers are safeguarded from fear of facing prosecution; especially if it is a scheme that undermines the Consumer Regulation and Policy. The OFT “watchdog’s” role has helped the UK community to understand the importance of a better consumers’ regulation and policy.
The freedom that the Enterprise Act of 2002 offers consumer bodies to be structured as super complainants allows the consumer to maintain the proximity of contact between the consumers and the OFT. The Citizen Advice Bureau provides free information and advice to vulnerable consumers who encounter problems in accessing important policy information especially when assessing costs.
Certain consumers find it difficult to file their complaints because they cannot afford advocacy fees. The Water Voice or Consumer Water Council helps the consumer in accessing safe, pathogen free and clean water. Safe water benefits vulnerable consumers in sewage polluted areas, poor drained areas and areas experiencing underground leakages.
The good garage and auto mobile repair schemes have helped consumers in accessing better automobile services. People who do not have enough information on car servicing and maintenance, cost of purchase and repair can depend on the scheme for direction.
Recent invention in automobiles has been re-coded and appreciated as the consumers are availed with important information to earn their desired vehicles based on their willingness to buy and access the services. The policy assures the consumer of an efficient delivery system, resource policy and legislative measure. The Sale of Goods Act of 1979 facilitates efficiency of sales to the targeted consumer.
The act assures vulnerable consumers of the right sales. The act connects the consumer with producers thus enabling an effective network of business. Consumers who are usually exposed to diverse challenges on the kind of products or services to go for are offered a variety of options by the policy. The Unfair Contract Act of 1977 is a practical clause for the vulnerable and less experienced consumers.
The act teaches them about the importance of fair trade and competition. The principle of regulation engages the act in working to motivate rational regulation and industrial evaluation while maintaining safety of the consumers. The UK’s policy generates economic momentum by prioritizing the consumer.
The consumer becomes the subject matter and point of interest of the market. The merger inscription ensures that consumers’ issues are incorporated in competition and merger enquiries. Alongside the super complaints docket, the merger works to check on market failure and opportunity cost.
EU’s assistance to the vulnerable consumers
The European Policy and Regulation integrates a number of clauses and acts that are expected to be implemented and applied by all stakeholders. It is however noted that despite the acts and clauses, the EU has managed to produce little, or at a given point, no assistance to the vulnerable consumers. The commission’s council has also done little to observe consumers’ protection regulations.
The Green Paper has been termed as ‘just any other publication’. Not many producers, manufacturers or suppliers are ready to comply with the clause. Certain manufacturers view the publication as a framework for developing top level consumer protection. The EU which is comprised of many member states experiences difficulty in running the policies because of the big number of its members.
Based on the members, the fair monitoring of markets and national consumer policies becomes a challenge, with unfair representation of commissioners and representatives. Many issues emerge and the consumers’ interests tend to diverge from the original intentions.
The provision of better education to consumers is one of the many policies that the EU tends to maintain but due to ignorance and little information; consumers become vulnerable due to lack of enough information. Health is important for all consumers and especially among the weak and malnourished ones. The European policy and regulation on consumer protection is mandated to maintain health and safety standards.
When it comes to work policies, construction workers tend to fear the medical cover because the policy and regulation does not include compensation especially if the accident is beyond the job scope. This fact delays the response awaited by the consumer.
The profiles of climatic action, energy and environment are sometimes a challenge and unfair to vulnerable consumers who may include the normal citizens, government members and non-governmental agents.
The provision on age and medical background of consumers in respect to drug and substance abuse has always been promoted in Europe with the set standards and regulations protecting consumers from exploitation and abuse. The commission in charge of safety creates awareness in social and public settings for individuals who are ready to be informed.
The youths are the most affected when it comes to drug and substance abuse with rising cases of addiction and crime. Suicide has also being linked to drug abuse or overdose.
Conclusion
The policies of e-commerce9 have not been favorably exploited. The vulnerable consumers involving individuals and groups are yet to experience the full force of E-commerce. Better and immediate regulations are needed to avail electronic exchange of both goods and services. Most consumers are ill informed when it comes to monetary and budgetary matters.
This kind of ignorance can bring about vulnerability to the consumers. The economic, monetary and budgetary clauses suggest the acquisition of economic power by the consumers in the future. The long procedures and formalities on monetary and budgetary policies may distract the consumers and consequently expose them to exploitation.
Countries from Africa, Asia and America prefer to buy things especially electronics and automobiles in Europe. In this regard, the policies employed by the UK and the entire world should protect the international consumer. The formulation of better and convenient policies can ensure that consumers are assured of a better, healthier, convenient and economically powerful market and trade.
Research should be conducted to find better policy frameworks within the EU and in the UK which can enhance consumer protection. Consumers have in the past been exploited by various states within the European region and this fact has led to the deterioration of economic standards in the region.
Various governments under the EU should allocate more funds towards creation of mechanisms that would eliminate cartels which have exploited innocent consumers for decades.
The initiative cannot however be realized if the EU member states do not demonstrate the will to safeguard the consumers in the European region. Whether the countries enforce the legislation or not is not an issue. The right legislation for consumer protection must first be established.
Footnotes
1 OFT refers to Office of Fair Trade. It is a legal entity that safeguards consumers from being exploited through economic policies
2 Consumer refers to an individual who buys goods and services for his own consumption
3 EU refers to the European Union
4 Vulnerable consumer refers to a consumer who is susceptible to exploitation
5 UK refers to the United Kingdom
6 The European consumer policy and regulation refers to a legislation that is used by states within the EU. The legislation outlines measures for the protection of consumers.
7 Face book is a type of an on-line social site that individuals subscribe to and become members. Once a member, an individual can meet other members on-line and access their personal information
8Twitter is a type of an on-line social site that individuals use in making comments about various issues happening in the local and international levels.
The Triple Aim developed by the Institute of Healthcare Improvement (IHI) is a three-dimensional model of the US healthcare system development. The main goal of this framework is to reform all aspects of the healthcare system performance by improving patients’ experience and overall health of the population as well as reducing the cost of the health care per capita. According to the IHI’s belief and vision, all these three dimensions, working together, will improve the current condition of the healthcare system in the USA. Nowadays, the US healthcare system is found to be one of the most expensive in the world, and it is expected to rise even more in the upcoming years due to the increase in both overall lifespans of the population and cases of chronic medical diseases. For the framework to be effective, all of three dimensions should work simultaneously.
The first part of the Triple Aim is focused on the improvement of the overall experience of patients within the healthcare system. In order to achieve this goal, the healthcare organizations should identify the existing barriers ad risks, and assess the level of overall mortality of the population. The second dimension is concerned with the improvement of the overall health of the US population. After finding out all the risks and challenges that communities face, the healthcare organizations should address these issues preventively and pre-emptively, reducing the healthcare cost and providing patient-centered care. The last facet of the Triple Aim model is to reduce the per capita cost of the healthcare provision. According to the statistics, more than 17% of the gross domestic product are the expenses on the health care (“IHI Triple Aim”, n.d.). Although the cost of the medical care is rising annually, its quality is not, unfortunately. While many other countries in the world offer better quality of healthcare for lower costs, the USA fails to do so due to the aging population, longer life expectancy and prevailing number of chronic medical conditions. Therefore, there is a need to implement platforms and models to tackle the issue of the high healthcare expenses.
The IHI represented five main concepts of the Triple Aim framework, which will optimize the US health system: focus on individuals and families, redesign of “primary care” services and structures, prevention and health promotion, cost control platform, and system integration. Within individual healthcare organizations these concepts can be applied through maintaining partnerships with individuals, their families and caregivers; planning and customizing care at the level of the patient; forming a team of professionals for basic services; rewarding healthcare providers for providing better health for the population; developing a system for ongoing learning and improvement. Examples to demonstrate the changes in the healthcare system made due to the Triple Aim model are the implementation of Electronic Health Records, Accountable Care Organizations, bundled payments, patient-centered medical homes and other similar initiatives.
The implementation of the IHI’s Triple Aim model can be challenging and problematic as within this framework it is crucial to maintain the balance between all three goals. It can be the case when the overall health of the community improves but at the expense of the cost, and vice versa. However, the impact made by the Triple Aim model on the overall community health and quality of the medical care can be demonstrated by the example of Primary Care Coalition in Montgomery County, Maryland (“Achieving the IHI Triple Aim: Summaries of Success”, n.d.). This coalition was one among 15 healthcare organizations to acquire the IHI Triple Aim system, and their CEO, Steve Galen, indicated the effectiveness of the system in their organization. By persuading specialists to treat patients for free, encouraging the collaboration between healthcare organizations, government and social service organizations, and expanding capacity of low-cost mammograms to make it easier for women to get them, the Primary Care Coalition was able to move towards a population health focus. In addition, Steven Galen believes that by further implementing the Triple Aim to other organizations in the county, they will be able to reduce the cost of the provided healthcare by 20%, enhancing the health of the population even more. Moreover, according to the study by Farmanova et al. (2017), the Canadian example demonstrates that all three goals can be achieved through the implementation of the IHI Triple Aim model. Although the integration process requires a high level of governance, continuous quality improvement and collaboration between different sectors, the overall success of the Triple Aim framework can be achieved.
One of the innovative delivery models that was introduced as a part of the Triple Aim and concerned with the reduction of the healthcare provision cost via reimbursement is Accountable Care Organizations (ACOs). ACO is groups of different specialists and experts that voluntarily work together in collaboration to provide a patient-centered care and reduce the cost of the medical care. These organizations were implemented to meet the goal of the Triple Aim as well as Quadruple Aim frameworks. The main goal of ACOs is to ensure the provision of quality and cost-effective care to a specific population. In order to meet this goal, a number of experts such as physicians, primary-care providers, hospitals and others create a network, identify the targeted population and assume the risks they face, mitigate those risks and ensure qualified care provision without wasteful and unnecessary expenses. This model was first introduced in the US healthcare system, and rapidly gained popularity among policy-makers from other countries such as Canada and England. In ACOs, healthcare organizations are accountable to patients and payers via a pay-for-performance model, in which medical care providers share their overall savings for a patient, reducing the overall cost of the provided medical care without negatively influencing its quality. In this model, providers focus on the total cost of the patients’ care rather than cost of services. ACOs tie the payments for the healthcare provision directly to its quality and makes providers financially responsible for the expenses that the patients have to make for the treatment. In other words, care providers do not receive payments on a fee-for-service model, i.e. for each service, procedure they provide, but receive money based on their overall performance in delivering health to the population.
Since the ACOs model was first introduced in the USA, it is found to be very effective in addressing the issue of the high healthcare expenses. According to the research by Wilson et al. (2020), the ACOs manage to reduce the cost of the medical care provision across the US without reducing the quality of the care. Moreover, after the ACOs implementation, there was seen a quality improvement in a number of health care organizations. Overall, it was found that most of the organizations that applied the ACO model were more effective in meeting majority of quality indicators and performed better than traditional fee-for-service model.
Healthcare providers stress the importance of protecting patients’ data and enhancing their experiences in a healthcare setting. Several securing acts and legislations have been implemented in order to protect both patients and clinicians and further increase the quality of the provided care (Centers for Medicare and Medicaid Services, 2015). One such legislation is the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which by initiating the Quality Payment Program determined fair payments to healthcare providers based on the quality of their services.
The Impact of MACRA
System Implementation
The key concept behind MACRA is an attempt to achieve value-based care over quantity-based care. To assess the efficiency of healthcare providers, it is highly important to understand the aspects of the quality of the services (Clough & McClellan, 2016). Furthermore, the computer systems work efficiently and store all information that would help determine the quality and efficiency of the provided care, and the subsequent payments.
Clinical Care & Workflow & Patient/Provider Interactions
The development of MACRA allows for a higher quality of healthcare provided to the patients. According to Casalino (2017), the creation of MACRA influenced healthcare providers to move from independent practices to corporations due to the system being successfully implemented specifically with corporate employment. Therefore, the act allows for more efficient and accessible health services to a larger number of patients.
Organizational Policies and Procedures
Specific procedures need to be applied to prepare for the implementation of MACRA. McGonigle et al. (2017) stress the importance of the use of technology in hospitals and clinics that allows for the correct processing and storage of the required information. Documentation is also crucial in executing the policy as it allows for the more accurate control of the relevant data that would eventually help determine the quality of the care provided.
McGonigle, D., & Mastrian, K. G. (2017). Legislative aspects of nursing informatics: HITECH and HIPAA. In Nursing Informatics and the Foundation of Knowledge (4th ed.). Jones & Bartlett Learning. Kindle edition.
McGonigle, D., & Mastrian, K. G. (2017). Workflow and beyond meaningful use. In Nursing Informatics and the Foundation of Knowledge (4th ed.). Jones & Bartlett Learning. Kindle edition.
The too big to fail is a concept that certain banks or financial institutions cannot be let to fail, since their failure would have too much effect on the general economy thus causing financial disability on the national and even international financial systems (A dictionary of Business and Management 2).
The reasoning behind the “too big to fail” concept is that if a bank or financial institution that does business with a lot other businesses in the economy was to fail, then the rebound effect would be too much for the economy to handle. As such, the central bank is obligated to bail such financial institutions out, not so much for the sake of the individual institution, but to shield the economy from the consequences of the closure.
According to the (A Dictionary of Business and Management 45), the too big to fail concept contends that once the central bank bails the bank, the bank willingly takes on more risks to make business more viable. The too big to fail theory is only applicable to large financial institutions connected to other financial institutions (Wessel 5).
Investors who do business with the too big to fail institutions are a less worried lot than their counterpart who trade with ordinary financial institutions because they have a “taxpayer subsidy”, which cushions them against losses (Wessel 12).
However, not all financial institutions get the bail out as indicated in the theory. In 1995, Baring Brothers, a London based Merchant Bank was not bailed out as would have been anticipated because the Bank of England did not see any risk to the financial systems in the country that could be caused by its failure. Further, it was established that the Baring Brothers had failed due to irregular trading the bank had in Singapore’s derivates market (A Dictionary of Business Management 16).
The too big to fail concept is a reaction to the continued mergers and acquisitions in the financial sectors, which leads to a complexity of financial institutions. According to (Folkerts-Landau et al 13), consolidation is mainly motivated by cost saving measures, or revenue enhancement motives.
In the wake of globalization, such financial conglomerates are no longer content with working inside territorial boundaries (A Dictionary of Business Management 25). This means that they are more willing to explore the international markets. Consequently, this exposes them to more risks.
In a free market economy, it is only plausible that market forces would close banks that do not meet their credit obligations (Hetzel 7). However, this does not happen with too big to fail financial institutions. Traditionally, the regulation of the banking sector was the mandate of bank regulators.
With the increased diversification of the financial institutions, which includes mergers among banks, insurance companies and even funds management, banking regulators are finding themselves more as observers, rather than regulators. This is mainly because with the diversification of the financial firms, systemic regulation which was the forte of the banking regulators is overwhelmed by the mere complexity.
More to this, the management of financial conglomerates is more integrated laying little emphasis on legal entities and functional regulatory authorities of national borders. Considering this, often complex financial transactions that such conglomerates handle, the occurrence of failure in the big financial institutions leans more towards systemic failures than anything else.
There is contention among financial analysts about the effect of too-big-to-fail. While one group maintains that it is a good policy to ensure that economies do not suffer as a result of a financial conglomerate going bankrupt, others (Dowd 1; Bebchuk 1) contends that this concept encourages financial institutions to take irresponsible risk, with the full knowledge that they are assured of survival since the government cannot after all let them fail. “The Too big to fail concept resulted from a deficiency in bankruptcy arrangements for banks” (Hetzel 3).
Such sentiments are aired because unlike nonfinancial institutions which are subject to bankruptcy arrangements should they fail to meet their financial obligations; banks are exempted from bankruptcy law. In its place, banks and other financial institutions can continue with normal operations as policy makers determine whether they are viable or not.
This approach is adopted because though banks may fail to meet their short term credit obligations, they are usually viable for restructuring. More to this, it is agreeable that even when a financial institution cannot be restructured, giving it time to liquidate its assets over a length of time results in more value than immediate closure.
In the absence of bankruptcy laws for the financial institutions, the Federal Reserve and the Federal Deposit Insurance Corporation (at least in the United States) has been mandated with coming up with an “informal discount window” for financial institutions for purposes of preventing abrupt closure. As such, too big to fail is perceived as a concept that arose mainly from pressures arising from unsatisfactory arrangements for closing bankrupt banks, rather from conscious decisions by policy makers (Hetzel 6).
A recent activity in the financial market was testimony to the Too big to fail concept. In the financial crisis that hit the financial markets across the world starting 2007 to 2009, Bear Sterns and AIG were among financial institutions that received government bailout.
However, Lehman Brothers did not. This left analysts as well as laymen wondering just what banking regulators and supervisors considers when deciding whether a bank is too big to fail. Literature in to this concept (Folkerts-Landau et al 13 ; Rajan 4) indicate that large financial institutions are more likely to be categorized as too big to fail compared to average or small institutions.
More to this, the potential cost to taxpayers and the general economy is also weighted before regulators and supervisors decide whether to bailout a bank or not. Notably Lehman Brothers had $691.1 billion book value worth of assets at the time of its closure, while Bear Stearns had $395.4 billion book value of assets when it was bailed out.
Too big to fail has a fair share of benefits as well as disadvantages. The benefits include the fact that banks gain favor with uninsured creditors and other participants in the market. In addition, too big to fail institutions are able to operate on lower regulatory costs thus increasing the probability of receiving more regulatory leniency.
The fact that such institutions have access to the government’s safety net means that they can operate on a lower capital base and funds as compared to other financial institutions (Folkerts-Landau et al 11). The perception that the government would bail out such institutions in an event of a financial crisis allows more uninsured creditors the luxury of doing business with the too big to fail institutions.
The disadvantages however seem to outweigh the good since the concept reduces discipline in the financial markets by encouraging excessive risk taking by the financial institutions, creating uneven playing fields for smaller and emerging financial institutions, and costing the government and the tax payer a lot of money, should a bail-out be deemed necessary (Cloutier 4).
In the wake of a need to find a solution to the cost that the too big to fail institutions cost the government in bailouts or the entire risk they pose to the economy should they be allowed to fail, several remedies have been suggested.
First, analysts, (Rajan 6; Cloutier 4) suggests that “bank regulators need resolution authority over the too big to fail institutions, just the same way that the FDIC has resolution authority over banks.” Currently, regulators have no authority over the resolution of banking holding companies or non-banking institutions.
More transparency in the financial sectors is also recommended as one of the too big to fail remedy (Rajan 6). Currently, regulators and supervisors only have piecemeal information regarding the operations of most banking institutions. Without such information, supervisors especially have a hard time conducting onsite examination of the financial institutions and their subsidiaries.
In an ideal situation, supervisory authorities have the legal mandate to conduct examinations of data provided to them by the banks, verify the same, restrain any unsound practices by the banks and in extreme circumstances, force the banks to exit (Folkerts-Landau et al 13)
Breaking up the too big to fail institutions may be the least desirable action to the players, but such an action would be the most ideal to completely resolve the risk issues posed by such institutions to the entire economy (Cloutier 3). This however would be a systemic approach that could take years before enforcement since it would need policy formulation and willingness on the part of the financial players.
In an address to congress, (Cloutier 13) stated that “the prevailing financial system is too concentrated, and lacking the necessary regulation. The four largest banking companies in the United States today control an excess of 40 percent of the country’s deposits, an excess of 50 percent of all assets held by banks in the entire country.”
Such concentration is prone to political pressures especially where guarantees on the public sector are needed to guarantee the banks’ liabilities (Folkerts-Landau et al 13). With this statistics, it is rather obvious that the too big to fail institutions pose a major risk to the economy. Having a more diverse banking sector would not only reduce the risk, but would also promote competition and innovation, in addition to availing consumers more channels of credit and business.
Dealing with the already established too big to fail financial institutions or the too-interconnected business which are hard to regulate and manage can be through breaking them up, or forcing them to divest assets (Cloutier 4). The latter would reduce the risk that such institutions pose to the financial systems.
More so, preventing others from coming up, through regulating the extent to which a financial institution can grow is also a viable alternative (Rajan 13). With these solutions in mind, it is however proper to acknowledge the process of growth that leads to the too big to fail institutions. Unlike what most people would be tempted to believe, these institutions follow an organic growth path, mainly as a result of efficiency in management and strategic planning.
Through expansion and growth, most of them realize the profits that come with business growth. To some, diversification is a mode of risk reduction. As such, a number have invested not only in traditional-like banking systems, but have also diversified their investments into mutual funds and insurance. This makes the remedies suggested above even more hard to enact across the board.
Even if regulators and supervisory authorities were given the freehand to handle these banks, the mere amount of books, information and business is just overwhelming (Rajan 4). This is because the institutions have assets, gross-derivatives positions, liabilities, net-derivatives positions, profitability margins and transactions, all which form a reasonable metric through which the regulators can impose a limit.
Conclusion
The expansion, mergers and acquisitions that led to the creation of too bog to fail institutions is tantamount to mixing commerce and banking. This is a dangerous precedent that will continue posing systemic risks in the financial sector (Coutier 11).
In the United States, the mandate to find lasting solutions to this concept lies with the concept, which has the powers to initiate policy frameworks that would infuse regulation, assessment and the eventual disintegration of financial institutions that are too big for the general good of the economy.
Further, it is still within Congress’ mandate to come up with policies that would prevent future concentration of commercial and financial powers in institution since such are the source of the current too big to fail institutions. After all, the phrase “if it’s too big to fail, it’s probably too big to exist” might contain some wisdom that may shield the financial markets in the future.
Works Cited
A Dictionary of Business and Management. “Too Big to Fail”. Encyclopedia.com. 2006. Web.
Cloutier, Couns. “Too Big to Fail: The Role of the Anti-trust Law in Government-Funded Consolidation in the Banking Industry.” Testimony of Mr. C.R. Cloutier, president and CEO, MidSouth Bank, NA. March 2009. Web.
Dowd, Kevin. “Too Big to Fail? Long Term Capital Management and the Federal Reserve.” CATO institute Briefing Papers. No. 51 (1996):1-12. Print.
Folkerts-Landau , David. F., Lindgren, Carl-Johan and IMF. Toward a framework for financial stability. New York: International Monetary Fund, 1998. Print.
Hetzel, Robert, L. “Too Big to Fail. Origins, Consequences, and Outlook.” Economic Review. (1991): 4-13.
Rajan, Raghuram. “Too Systemic to Fail: Consequences, causes and Potential remedies.”Written Statement to the Senate Banking Committee Hearings. May 6, 2009. Web.