Guest Blog – Andy Foster – Reforming the Separate Business Rule
I downloaded some music the other day from a well-known on-line music retailer. Just before I completed the transaction I was greeted with a message asking me to accept the terms and conditions of the retailer. I gave a cursory scroll down the page which seemed in order only to realise it was page 1 of 57. What was I to do? – read all pages in line with all the training and advice I’d ever been subjected to? (Probably) Or do what 98% of the population do and click accept? Time being of the essence I accepted. Clear consent was given on this occasion, but was it informed consent?
The concept of informed consent will be tested heavily over the next few years as the Solicitors Regulation Authority (SRA) push forward reforms to remove prohibitions under the separate business rule. The review of a rule which in practice hasn’t been effective for a long while was welcomed by many, but for others, the Panel included, there is a fear that this new found liberalism in the market will disadvantage large numbers of consumers who will be left in the dark about redress when things go wrong.
Of course firms will not be able to refer to separate businesses without achieving the informed consent of the consumer. But what does this mean in practice, and how will firms know when they have achieved it?
The dictionary definition tells us that ‘informed’ means a decision or judgement based on an understanding of the facts. This suggests that consumers need to demonstrate behaviour well beyond simple agreement. Throughout my career as a trading standards practitioner I have spent a lifetime picking up the pieces for consumers when things have gone wrong. In the majority of these cases there was clear consent to enter into contracts for goods and services but very rarely did I see evidence that the consumer acted in an informed way.
This is repeated across the world and sometimes complicated by faiths or social groups where consent is often given but the intention is often contradictory to that. Last year I spent some time researching in Northern Queensland with the Indigenous Consumer Affairs Network. They had spent time uncovering the issue of ‘gratuitous concurrence’. The term “gratuitous concurrence” refers to the tendency of an individual to agree with a proposition or question which is put to him or her, regardless of whether he truly agrees with that proposition or question.
According to the Australasian Institute of Judicial Administration an indigenous person may gratuitously agree with a questioner as a means of conveying readiness for cooperative interaction. That is, when indigenous people say “yes” to a question, it often does not mean “I agree with what you are asking me”. Instead, it often means “I think that if I say ‘yes’ you will see that I am obliging, and socially amenable and you will think well of me, and things will work out well between us.”
The result is quite sad; widespread pressure selling of various useless items from travelling traders who do not think twice about exploiting already stretched households which have very little capacity to make the repayments.
What becomes clear in modern legal frameworks is how a simple well intentioned relaxation of the rules designed to stimulate and open up access to justice can often result in leaving the vulnerable behind.
For years policy makers have developed regimes on the principle that when consumers are exposed to information it naturally follows that they will understand said information and make a judgement that serves their best interests. This simple notion that understanding follows information is of course deeply flawed, even when a consumer has signed a declaration or waiver.
Consumers make decisions for a whole variety of reasons and only on some occasions do these reasons correlate with the consumer’s best interests. Everyday consumers agree to enter into contracts because of feelings of urgency, price, times of emotional distress, because they have invested time with one provider already, because they are overwhelmed with a complex situation, because of the opportunity cost of shopping around, because of personal recommendation or simply because of convenience.
Very rarely will issues of redress options, or whether a provider is regulated or not, enter into that decision making process. And although firms will have the job of ensuring their clients do just that before referring them on to a separate business, this is not as easy as some might think.
I should be clear here: I’m not drawing a parallel between commercial exploitation and the legal services market in the UK. Rather, I am making the point that informed consent is very difficult to detect, time consuming to achieve, and something which risks coming back to bite the profession if implementation isn’t thought through carefully. After all, exposure to information and rational behaviour it would seem have very little in common.