Business talks: The importance of trading standards

Having recently bought the voices of thousands of small UK business to TSI’s annual Year Ahead conference, Ken Moon, chairman of the Federation of Small Businesses’ (FSB) Regulation Committee and chairman of the FSB Wessex Region, discusses how trading standards is essential to small businesses.

For many FSB members trading standards officers play an important role in their business lives. In broad terms this role has two elements:

  • Directly regulating particular business practices undertaken by FSB members
  • Ensuring a competitive playing field for businesses by tackling the unfair and illegal business practices of rogue traders

In the FSB’s view clear ‘rules of the game’ are needed so businesses can compete fairly in the market place. Further, where appropriate, trading standards officers need to use specific but well evidenced measures to tackle particular problems.

Regulating business practices: risk-based and proportionate

Consumer legislation has a broad reach, impacting a wide range of businesses. The role of trading standards is significant for FSB members. Our last survey found that nearly half (44%) of the FSB members surveyed had to take account of consumer legislation to run their business. The same survey found that 10% of FSB members considered consumer legislation to be one of the most burdensome types of regulation.

The other side of the coin to having a rule is the enforcement of that rule. The FSB believes that not only should the rules be risk-based and proportionate but that enforcement has to adhere strictly to these principles too. This has been recognised since the Hampton Review of 2005 laid out important principles for better enforcement. In the succeeding years many regulators, such as trading standards, have adapted to them. However, some regulators can improve still further.

The FSB wants a ‘partnership’ approach developed and applied consistently by regulators as the standard way of regulating small businesses.

Why a ‘partnership’ approach?

For the FSB a ‘partnership’ approach recognises explicitly three important factors:

  • The overwhelming majority of small businesses want to comply with all regulations;
  • Willingness to comply by the many has to be supported by effective enforcement against those who deliberately and maliciously flout the rules by the few. In such circumstances decisive action is needed to ensure the public is protected from practices which might result in considerable risk to the public; while
  • The burden of regulation sits considerably more heavily on small businesses than on larger businesses. In the latter the costs of compliance can be spread among specialist teams solely focussed on ensuring that business is following the rules. In smaller businesses it is likely to be the owner-manager ensuring compliance with the law. At the same time small business owners are balancing multiple other roles e.g. chief executive, finance director, marketing director, operations director and company secretary.

Regulators pursuing a ‘partnership’ model might try to tailor their activity by providing help to small businesses to facilitate their compliance e.g. through the provision of advice to the relevant small business. The result of the ‘partnership’ approach would be win-win for the business, the regulator and consumers.

Trading standards: helping create a level-playing field for competitive businesses

In the FSB’s view a ‘partnership’ approach does not mean being ‘soft’ on those who deliberately and maliciously flout the law for their own advantage. Taking on rogue traders is an incredibly valuable job, which FSB members are grateful to trading standards officers for doing. Getting rid of rogue traders helps ensure fair and competitive markets where the best businesses can thrive and consumers get value-for-money for what they buy. This is the outcome everyone wants.

Ken Moon speaking at TSI's Year Ahead conference in February 2015

Ken Moon at TSI’s Year Ahead conference in February 2015

The ‘partnership’ approach can bring potentially additional benefits to all sides in the fight against rogue traders. One benefit is cost savings. In constrained times like today the FSB believes that assisting small businesses proactively to comply will reduce the costs of routine inspection and enforcement and the incidences of minor non-compliance in the medium to long-run. This will free up more resource to track down and prosecute genuine rogue traders.

A ‘partnership’ approach could – over time – help reduce the fear, stress and other antagonistic elements which sometimes figure in the relationship between agencies of the state and the small business owners whose business is subject to inspection. As a consequence there may be the opportunity for owner-managers to become genuine ‘partners’ in helping tackle rogue traders. Local businesses will often see where the rogues are operating in their sector before the authorities and can provide valuable intelligence to the enforcement authorities.

The FSB looks forward to working closely and constructively, based on an open dialogue, with the Trading Standards Institute and its members over the coming years to help ensure that British small businesses are compliant with their obligations and that markets in the UK are as fair and competitive as possible.

Ken Moon runs his own regulatory compliance and training business Ken Moon & Associates Ltd. He is also Chairman of the FSB’s Regulation Committee and Chairman of the FSB Wessex Region.

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