Consumer Council Good Corporate Citizen's Guide (March 15, 2005)
PREAMBLE
Under the Consumer Council
Ordinance, the Consumer Council has a statutory responsibility
to, amongst other things, encourage business and professional
associations to establish appropriate codes of practice to regulate
the activities of their members.
The Council carries out a
comprehensive range of activities including collecting and
disseminating information on goods and services and tendering
advice on matters that affect the interests of consumers. Through
these and other ongoing activities in consumer education and
complaint handling, the Council strives to ensure that consumers
are well informed and are responsible in their consuming behaviour.
Accordingly, the Council has published, and will continue to
publish guides and information brochures for consumers to assist
them in understanding their rights as well as responsibilities in
the marketplace.
In furthering these objectives, the
Council has produced this Good Corporate Citizen's Guide that
addresses corporate rights and responsibilities.
The Council understands that a
consumer protection policy strives to meet various public policy
objectives of the Government which are influenced by socio
political as well as economic considerations. Included amongst
those objectives are measures to achieve the following:
- Improve consumer welfare;
- Protect consumers from harmful and unscrupulous trade
practices;
- Educate consumers as to their responsibilities to be well
informed and reasonable in the marketplace;
- Promote fair and equitable trade conduct and behaviour with
respect to customers and to business associates/rivals;
- Enhance economic efficiency in all its forms, i.e. productive,
dynamic and allocative efficiency;
- Guarantee economic freedom of small and medium-sized
enterprises (SMEs) and consumers;
- Promote the role of SMEs due to their role in enhancing dynamic
efficiency in the economy;
- Protect the process of fair competition, especially when the
dynamism brought about by the entry of SMEs into the marketplace is
threatened by unfair trade behaviour of large business enterprises;
and
- Promote social harmony in the community, in particular, between
Government, businesses and consumers so as to assist in easing
social tensions.
In preparing this Good Corporate
Citizen's Guide, the Council is conscious of the many objectives of
Government, the business community and consumers, and that it is
important to maintain an environment that balances those
objectives. The Council is fully aware that because the ultimate
objective is to enhance economic efficiency, the aspirations of
both consumers and the business community are not incompatible, but
are interconnected.
THE MEANING OF
CORPORATE CITIZENSHIP
Corporate citizenship recognises that
businesses have a responsibility to respect the individuals, the
community and the environment in a way that when devising or
implementing any rightful business strategy they will abide by laws
and regulations, and adhere to high ethical standards.
Individual citizens also have
responsibilities and rights. Together with corporate citizens these
entail a set of social values that provide a benchmark upon which
they can perform their respective roles in harmony with the wider
community, for mutual benefit.
Broadly speaking, the social
responsibility of businesses covers the following six principles:
maintaining a high standard of business ethics; working as part of
the community; protecting the environment; providing good corporate
governance; and engaging in fair trade and business practices, as
well as fair workplace relations.
The Council believes that when
businesses apply high standards of service, thereby instilling
consumer confidence in their products and services, they ensure
that not only will the business succeed in its endeavours, but also
that the community as a whole will benefit from the positive effect
this has on maintaining dynamism in the economy. The standards are
formed around the following aspects of business practice:
1. Advertising and Marketing
2. Price Indication
3. Contracts
4. Quality of Goods or
Services
5. Safety of Goods or Services
6. Sustainable Development
7. Electronic Commerce
8. Privacy
9. Equal Opportunity
10. Anti-corruption
11. Fair Competition
12. Complaint Handling
The Council encourages businesses to
observe the principles as identified in this Guide in their actions
in the market place.
To further assist trade associations
in considering what matters should be incorporated into their rules
and codes of conduct, the Council has also prepared suggested Rules
addressing some of the principles set out above in this Guide.
There are many trade associations in Hong Kong that cover a variety
of different goods and services, and which operate in different
commercial environments. Accordingly, the suggested Rules drafted
by the Council should be seen as a resource. The Council encourages
the associations to use the suggested Rules in whole or in part and
amend them to suit their own particular circumstances.
The suggested Rules are:
Trade Practices Rules
Complaint Handling Rules
Fair Competition Rules
These may be supplemented by further
rules and other documents to take account of changing
circumstances. For example, the Council is contemplating a paper on
the rights and responsibilities of consumers.
1. ADVERTISING
AND MARKETING
1.1 Properly informed consumers
will have confidence in dealing with a business. A good corporate
citizen should provide information to consumers about the goods and
services offered including after-sales services in an honest, open
and helpful manner.
1.2 All advertising and marketing
materials should be truthful, fair and reasonable in providing
customers with adequate information on which to base purchasing
decisions. They should not contain misleading information and
should comply with all relevant legislations, codes and rules.
1.3 If comparative advertising is
used, the goods or services being compared should be reasonably
similar; and the comparison should be valid for the life of the
promotion.
1.4 All forms of price
advertising or price comparisons should be genuine and accurate,
and the savings implied should have real substance.
2 PRICE
INDICATION
2.1 The price of goods or
services is usually the most important factor in consumer choice.
According to the Council's statistics, most consumer complaints are
brought about by unclear or misleading price indication. Businesses
should therefore pay special attention to price indication.
2.2 With regard to price
indications, consumers should be provided with complete and
truthful information on the real overall price of the goods or
services.
2.3 To avoid confusion, the total
price to be paid by a consumer of a specific item of goods or
service should be clearly and prominently displayed, and should be
expressed in common terminology.
2.4 In using direct mail to
attract consumers, businesses should not assert a right to payment
if a customer does not choose to "opt out" of an offer. Where
customers are minors, businesses should exercise restraint.
2.5 If gifts, prizes or other
free items are promised, they should be made available, and at no
extra charge to consumers.
3
CONTRACTS
Businesses and consumers may enter
into contracts for the purchase of goods or services. No matter
whether they are made verbally or in writing, all provisions in
contracts must be fair and reasonable. Guidelines to observe would
be as follows:
(a) Provisions in contracts
should not be drafted in a way that are slanted unreasonably
towards the provider of the goods or services in question.
(b) Contracts should be written
in plain language.
(c) The relevant contract terms
for defining the extent of rights and obligations should be brought
to the attention of the consumer in the language chosen by the
consumer. Chinese language contracts should always be
available.
(d) An acceptable font size
should be used that makes contracts easy to read.
(e) There should be clear
provision, in a prominent place or highlighted, of important terms
of a contract; particularly those which affect the consumer's
interest such as penalty for consumers defaulting in the
contract.
(f) A general unilateral power of
variation that could be used against the consumer's expectations
when accepting the contract should not be expressly given.
(g) A receipt should always be
given to consumers upon receiving payment.
(h) Warranties that are provided
to consumers should clearly state the terms and conditions that
apply.
4. QUALITY OF
GOODS OR SERVICES
4.1 Businesses that aim to
succeed in the marketplace should secure consumer confidence in
their goods and services. Good corporate citizens should:
(a) observe high standards in
their goods or services;
(b) have a policy that guarantees
all goods or services provided are of merchantable quality;
(c) have a policy that guarantees
all goods or services provided are fit for the purpose;
(d) have a policy that
guarantees, at the very least, that refunds will be provided where
goods are not of merchantable quality or fit for the purpose;
and
(e) ensure that services will be
provided with due care and skill.
4.2 For more detailed suggested
Rules addressing the above principles numbered 1 to 4, please refer
to the related Council document 'Trade Practices Rules - Reference
for Industry Codes of Conduct'.
5. SAFETY OF
GOODS OR SERVICES
One of the basic consumer rights is
the right to safety of goods or services. In Hong Kong, there are
laws and regulations imposing a duty on manufacturers, importers
and suppliers of certain goods or services to ensure that the goods
or services they supply are safe. In addition to observing laws in
Hong Kong that provide safety standards, and keeping the safety of
consumers in mind, good corporate citizens should:
(a) have mechanisms in place
whereby safety considerations become part of the daily process of
goods procurement, storage, presentation and delivery;
(b) maintain appropriate internal
compliance measures with regard to all industry regulations;
and
(c) have procedures in place to
quickly and efficiently warn consumers of potential problems, and
to effectively recall any faulty goods.
6. SUSTAINABLE
DEVELOPMENT
To promote sustainable development of
our environment, good corporate citizens should:
(a) use environmentally-friendly
materials and processes in manufacture and packaging;
(b) encourage
environmentally-friendly design;
(c) take into consideration the
optimal life-cycle in terms of repairability and upgradability of
the goods;
(d) improve recyclability;
(e) provide information on how to
dispose of goods in the most environmentally-friendly way;
(f) provide alternatives to
buying new goods, such as sharing, refill, buying used goods, or
using a service instead;
(g) apply internationally
recognized and updated standards in making green claims [1]; and
(h) participate in eco-labelling
schemes of good standing where they apply.
7. ELECTRONIC
COMMERCE
Traders selling goods or services
through electronic commerce should ensure that their conduct is in
accordance with internationally acceptable standards [2] and that
their websites are constructed in a way that clearly indicates:
(a) information about the
identity of the business including the legal name and geographic
address;
(b) accurate information
describing the goods or services offered;
(c) guarantees, warranties or
other provisions relating to after-sales service; any cooling-off
period;
(d) terms of delivery including
the time period of delivery;
(e) conditions related to return,
exchange, cancellation, or refund policy; and
(f) contact information for
consumers if they have problems with delivery or other queries,
such as the physical address for return of goods and a telephone
number.
8. PRIVACY
Good corporate citizens will respect
the privacy of their customers. Customers who feel that their
privacy is under threat will be hard pressed to have trust in a
business. Good corporate citizens should observe appropriate
privacy legislation and relevant guidelines, and in particular:
(a) have appropriate mechanisms
in place to ensure the security of consumer transactions and
privacy of consumer information; and
(b) make the mechanisms clearly
known to customers so as to establish a welcome bond of trust
between the customers and the businesses they are dealing with.
9. EQUAL
OPPORTUNITY
To promote a fair and inclusive
society, good corporate citizens should have equal opportunity
principles into all aspects of their organization and operation. In
addition to observing laws in Hong Kong on equal opportunity, good
corporate citizens should:
(a) at all times promote the
concept and raise awareness of the principles relating to equal
opportunity;
(b) not discriminate against customers with a disability, or on
the ground of family status, sex, age or race in the provision of
goods or services; and
(c) adopt a helpful approach by making available to any
customer goods or services on the same terms and conditions as for
other customers.
10.
ANTI-CORRUPTION
Good corporate citizens should have
the responsibility to ensure that the goods or services they
provide are not only reliable, effective and efficient but also
that their delivery to customers is free from corruption and
malpractice. A corporate system control against corruption should
be established.
11. FAIR
COMPETITION
11.1 Hong Kong is a free market
that has built its success on vigorous competition. Customers
expect that when they are dealing with a business that is in
competition with other businesses in the marketplace, that the
principle of fair competition will be observed. There is a need to
ensure that competition is not only maintained at a high level, but
that it is fair and seen to be fair. Maintaining high standards of
vigorous and fair competitive behaviour will not only result in
more customers but will ensure that the business will remain 'ahead
of the pack'. Conduct between competitors or by dominant market
participants that restrict competition should not be tolerated. For
example, good corporate citizens should not:
(a) secretly agree amongst
themselves regarding aspects of their products on which consumers
would expect them to be competing (for example price or other
product attributes); or
(b) misuse their market power to
undermine the process of competition (for example by threatening
competitors' suppliers with the purpose of deterring existing
competitors from offering lower prices, or potential competitors
from entering a market).
11.2 The Government recognises
the importance that fair competition plays in maintaining Hong
Kong's economic well being and consumer welfare. The Competition
Policy Advisory Group (COMPAG), chaired by the Financial Secretary,
was established in December 1997 to provide a high-level and
dedicated forum to review fair competition related issues that have
substantial policy or systemic implications, and examine the extent
to which more fair competition should be introduced in the public
and private sectors. It promulgated a 'Statement on Competition
Policy' in May 1998 to provide an overarching policy framework to
guide sector-specific efforts to promote fair competition. In
September 2003 it issued the 'Guidelines to Maintain a Competitive
Environment and Define and Tackle Anti-competitive Practices'. This
provides pointers with objective benchmarks and principles to
assess Hong Kong's overall competitive environment; define and
tackle anti-competitive practices; as well as to ensure consistent
application of Hong Kong's fair competition policy across sectors
[3].
11.3 Moreover, under the
Government's sector-specific approach to fair competition policy,
the Telecommunications Ordinance and Broadcasting Ordinance contain
provisions governing competitive conduct in these sectors.
11.4 In harmony with the
Government's official policy, its guidelines, and legislative
provisions, the Council has drafted a related document entitled
'Fair Competition Rules - Reference for Industry Codes of Conduct'
that can serve as an easy reference for trade associations when
they consider what rules to draft in their codes of conduct that
refer to fair competitive conduct.
12. COMPLAINT
HANDLING
General
Mechanism
12.1 To remain successful, good
corporate citizens should have mechanisms to effectively handle
consumer complaints. The ease with which customers can inquire
about problems they have encountered and obtain a satisfactory
response will not only ensure they have confidence in the business
and remain loyal customers, but the business can quickly and
efficiently address any procedural issues to prevent problems from
recurring. Some basic principles are as follows:
(a) Focus not on who is right or
who is wrong, but how the problem can be solved for mutual
benefit.
(b) Provide easy access to
procedures on how to lodge complaints.
(c) Ensure that complaints are
dealt with in a fair manner, quickly and effectively and that staff
that handle complaints are informed on the products or services and
are consistently courteous.
(d) Provide handy locations for
hearing complaints, reasonable operating hours and short
waiting/queuing time.
(e) Monitor the service provided
by complaints staff to ensure it is operating smoothly, and in
order to predict future problems so as to prevent them from
arising.
(f) Establish an open dialogue
with user/consumer/community groups for practical guidance on what
customers expect from the business and how best to serve them.
(g) Have a performance pledge
that lists in detail customers' expectations, to provide services
within the times specified, and to handle customer complaints to
the business' best endeavours.
(h) Ensure that where complaints
cannot be resolved in-house, customers are informed of their right
to take the matter (if applicable) either to a relevant industry
complaint handling scheme or the Small Claims Tribunal.
Alternative
Dispute Resolution Schemes
12.2 Providing access for
consumers to a dispute resolution scheme provided by a third party
(for example an industry association or 'trust mark' scheme), as an
alternative to requiring a consumer to seek redress through the
courts or other costly mechanisms, will give consumers confidence
in the firm they are dealing with and demonstrate that the firm is
a good corporate citizen.
12.3 Alternative dispute
resolution (ADR) schemes in which consumers can have faith should
demonstrate principles of:
- Independence/Impartiality
- Transparency
- Accessibility
- Trust
12.4 The Council has prepared a
related document entitled 'Complaint Handling Rules - Reference for
Industry Codes of Conduct' - that provides more detailed
information on how the above principles can be put into practice
through the construction of relevant schemes or codes of
conduct.
Business dealings
between large businesses and SMEs
12.5 As good corporate citizens,
large businesses should also have complaint handling procedures and
ADR schemes similar to those for consumers described above to
effectively handle complaints from or disputes with SMEs which have
business dealings with them.
15th March 2005
Notes:
1. For example, see ISO
14021 January 2005.
2. For example, see OECD guidelines for
Consumer Protection in the Context of Electronic Commerce www.oecd.org
3. See the Hong Kong Government's
Competition Policy Advisory Group website www.compag.gov.hk .
