Satisfying Consumer Expectations - Cathay Pacific Airways Staff Forum

Connie Lau
Chief Executive
Consumer Council

[Businesses can only achieve their goals through the discipline of satisfying consumer expectations. This is a discipline that also applies to consumer advocates such as the Consumer Council. This presentation will examine what consumers expect from business and what they expect and receive from the Consumer Council]

Thank you for inviting me to speak with you today. It is always a pleasure to speak to business that has a high degree of contact with consumers and therefore has an appreciation of the need to satisfy consumer expectations.

I am sure you are all aware of the saying “the customer is always right”. This reflects the understanding that businesses can only achieve their goals through the discipline of satisfying consumer expectations. It also reflects the fact that businesses operate in a free market and are constantly striving to beat their competitors in attracting customers who are both informed and know what they want.

Of course, the customer is not always right. Anybody who has worked on the front line knows that there are some people who are never satisfied, who don’t really know what their subject, and cannot appreciate the difficulties that are faced in trying to satisfy everyone.

This is something that the Consumer Council is well aware of. We are a people focused organization, and our business is almost always dealing with consumer complaints. If you think it is bad having one angry customer at your front counter, complaining about not being able to get on a flight, just think what it is like for my front staff. Virtually all their customers are complaining about something or other.

But then again, dealing with complaints is a big part of our business and a major reason for our existence, so I shouldn’t protest too much. If everything was just fine, I might soon be out of job.

Dealing with complaints isn’t everything we do though. There is a lot more to our role, and our organisational structure covers a wide range of functions.

What does the Consumer Council do?

The Consumer Council is a statutory body, which is independent of Government. It operates through a committee structure consisting of persons who are appointed on an honorary basis from the community, as Members of the Council. The Council carries out its work through over 150 paid staff operating out its Head Office and eight Consumer Advice Centres located throughout Hong Kong.

The Council is not an investigation body. It operates largely through an ability to inform and through powers of persuasion. As such, comparisons are more properly made between it and consumers associations in other countries, rather than with government consumer protection enforcement agencies.

As far as our dealings with consumers are concerned, the main discipline on our operations is found in our Performance Pledge. The Performance Pledge lists what the Council understands as the public’s expectations of our service, for example:

• answer consumer enquiries and handle complaints promptly ;
• mediate disputes between consumers and service suppliers;
• conduct researches, surveys and product testing to produce and publish useful information and results;
• provide a regular outlet of information, advice and view points on all matters affecting the interest of consumers;
• monitor trade practices and liaise with industry bodies to safeguard consumer interests; and
• research on consumer policy and launch consumer education campaigns or related activities.

A major consumer complaint when dealing with some business operators is the lack of responsiveness to enquiries and complaints. Consumers feel that business is always eager to deal with them when they are thinking of purchasing something, but less so when the customer has a complaint. The common problem is that there is a reluctance in responding to their complaints and frustrating delays in actually contacting someone to speak to.

The Council’s Performance Pledge has strict performance targets applied to the way in which it deals with its customers. For example:

In handling consumer enquiries, telephone calls must be answered mostly within three minutes, personal calls at the counter within ten minutes, and letters must be responded to within fifteen working days.

When dealing with complaints, they must also be answered in three minutes over the phone or ten minutes at the counter. When received in writing, an acknowledgement must be sent within two working days, a preliminary reply by seven working days, and the complainant must be notified of the result of the Council’s deliberation, or progress, within sixteen working days.

Maintaining integrity and reliability in our dealings with consumers is uppermost in our minds. If there was to be any lapse on our part we would be very quickly made aware of our failings.

What do consumers expect of business?

By and large, businesses go about offering their goods and services in a competitive manner and are fair in their dealings with consumers. But there are always some who don’t play by the rules, or who think the rules should be different, or that there are rules for themselves and different rules for others.

This brings me to the question of what sort of rules should apply to businesses.

There are basic rules of honesty and fairness in dealing with others that virtually everyone agrees should be observed in business and life in general.

To a large degree, these rules mirror what consumer organizations around the world have recognised as basic consumer rights, and which have in one way or another been transformed into consumer protection laws.

The concept of consumer rights originated from former US President John F. Kennedy's declaration of four basic consumer rights:

• the right to safety;
• the right to be informed;
• the right to choose; and
• the right to be heard.

In addition to these rights, Consumers International, the international umbrella organisation of which the Consumer Council is a member, has subsequently added four more rights:

• the right to satisfaction of basic needs;
• the right to redress;
• the right to education; and
• the right to a healthy environment.

Together, these eight rights form the basis of work by Consumers International and consumer groups worldwide. In addition, the principles behind these eight consumer rights were embraced in the United Nations Guidelines for Consumer Protection adopted in 1985 in the United Nations' General Assembly, following a decade of hard lobbying by Consumers International and other consumer organizations.

More than twenty years later, these basic consumer rights are what consumers around the world expect their governments to deliver, and what they expect the business community to observe.

The rights also form the basic core of what is termed ‘Corporate Social Responsibility’. In other words, a commitment to behave ethically and contribute to economic development while improving the quality of life for the workforce, their families, as well as the local community at large.

Before I continue, I think we should reflect at this point on the fact that we are all consumers. It is important to note that the rights I have just noted are not abstract ideas that apply to other people; in other words, our customers. These are expectations that all of us have for our own well being.

How are these consumer expectations to be met?

The problem is that when everything else fails and there are some people who don’t listen to reason, we have to rely on laws to deliver the required outcomes. Moreover, consumers can always be expected to call for laws as the best way to resolve matters, and politicians to accept this approach.

I should hasten to add that laws are not necessarily the only answer to deliver the required outcomes. The Council promotes industry self regulation in some circumstances, and uses other means as an attempt to correct undesirable business behaviour. But at the end of the day, when these do not work, or are inappropriate, we are left with the option of legislation.

Legislation forms an important role in ensuring that consumer expectations are satisfied. And for its part, the Council has an ongoing task in lobbying the Government to ensure that the laws we currently have are kept up to date with what is happening in the marketplace, and that new laws are introduced where there are serious gaps in the legal framework.

How good are Hong Kong’s consumer laws?

Unfortunately for Hong Kong, and despite our status as an advanced economy, the consumer laws we have are not up to the standard found in other advanced economies.

In a report published in 2008, the Council examined the various laws and administrative procedures that currently serve the interests of Hong Kong consumers. The Council’s research, and its experience in working with consumers and businesses through its complaints handling and other services, indicated that there are deficiencies in the current consumer protection framework. As a result we made a number of recommendations that we believe are critically important to upholding consumer rights.

All of the recommendations arose out of a vast body of complaints made by consumers against unfair practices by some businesses, and the inability of the current framework to tackle the issues raised. The complaints were directed at many different business sectors, although there were some sectors that featured much more than others.

You will be pleased to note that complaints against airlines were not up there with the worst offenders. The frustrating thing for the Council was that those unfair practices we identified, that were being left unattended by the law, were practices that had been with us for some time. In addition, there are legal precedents available from other countries that we could easily use to tackle the problems.

Basic problems that are not being addressed in Hong Kong laws are as follows.

• The fact that existing laws against making false or misleading descriptions only apply to goods but not to the provision of services.
• There is no standard set of laws to tackle dubious and exaggerated claims in advertisements where consumers are led into error with their purchases. This is particularly the case for health and beauty products, which are of grave social concern.
• Harassment by salespersons is a disturbing experience for some consumers. However, the existing law does not cover marketing activities at private places such as doorstep sales, inside a consumer’s home or at private clubs. This provides a loophole for the unscrupulous sales persons to operate with impunity.
• A common and frustrating con trick against consumers is where traders advertise goods at a bargain price without having reasonable quantities or amounts available to meet the demand that would be reasonably expected. This form of advertising is simply a bait to attract consumers into a store, with the intention of switching them to other more expensive products.
• Prepaid coupons or prepaid services schemes have been a common subject of complaint, where traders fail to provide the prepaid goods or services, or to provide them within a reasonable time. The suspicion has been that there was either no intention to provide the goods or services into the foreseeable future, or that due regard was not given to the trader’s ability to supply the prepaid goods or services
• Unilateral variation clauses in ongoing consumer contracts are also common causes of complaint. Typically, traders give themselves a unilateral right to vary the length of termination notices, the monthly fee payable, and the goods or services supplied.

These types of undesirable conduct not only disadvantage consumers, but disadvantage honest businesses. Or even worse, if the conduct becomes the industry norm, it tends to make all businesses have to engage in that sort of unscrupulous conduct in order to keep up with their rivals and stay in business.

The Council’s primary recommendation to address the majority of issues is to create a comprehensive and cross sector consumer protection law, administered by a public enforcement agency.

This is the basic framework that exists in other comparable advanced economies. It is also the sort of framework that consumers expect to be in place to provide them with a basic ‘safety net’ to provide general safeguards against misleading or deceptive marketplace conduct regardless of what they are purchasing. It is also a framework that can adapt to the many situations that arise in the economy and possibly to the evolving nature of the 9 marketplace, as different goods and services are introduced, and different marketing tactics are devised to attract consumers.

In Conclusion

There is a saying that goes, “No one is listening to you, until you make a mistake”. We are all at risk of making mistakes, and mistakes do happen.

Moreover, even consumers make mistakes.

I listed earlier the eight basic consumer rights that all of us now expect to be observed by business. We have published the rights in a document available on our website. But importantly, we have also listed in the document what we consider to be consumer responsibilities.

There is quite a bit of information listed in the document. However, the four most important things that we make clear consumers should take responsibility for, is that they:

• keep themselves informed as best as possible;
• exercise due care when making decisions in the marketplace;
• consider the detrimental consequences that may arise from ill considered decisions; and
• honour reasonable obligations arising from their decisions.

These are very basic rules that consumers are constantly being told they should obey to avoid problems. In return, what consumers expect from us is that we recognise that there are rules of behaviour that also apply in our dealings with them.

They also expect that we should also impose a discipline on ourselves to make sure that we do not break those rules.

Thank you.