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Advantage Consumer: Customers love transparency!

On the occasion of World Consumer Rights Day, we celebrate the practice of sellers who share details, writes Pushpa Girimaji.

india Updated: Mar 15, 2008 00:13 IST

In many parts of Europe and North America, menu cards are publicly displayed by restaurant owners so that passers-by can have a clear idea of what it will cost to have a meal in their establishments. Consumers who are comfortable with both the ambience and the pricing will step in or else move on.

The concept of providing upfront detailed information about the cost of goods and services is slowly gaining popularity in different parts of the world. Such price lists, particularly when they also mention separately the service charges and the taxes, introduce transparency in pricing, satisfy consumers' right to information and help consumers compare prices and make an informed choice. In addition, transparency promotes healthy competition , thereby bringing down prices as well.

Take health services, for example. If hospitals-- in both in the government and the private sector-- provide a detailed list of charges for various diagnostic and consultation services, it would bring down consumer anxiety about costs, when they go for treatment. This is particularly true in the case of many private hospitals, where there is an absence of transparency in the costing of various services.

A couple of years ago, a major health insurance company in the United States--Aetna--decided to publicly disclose the exact price that it had negotiated with doctors in the Cincinnati area for medical procedures and tests. The price schedule included every Cincinnati area primary care physician and specialist and covered prices for 600 consumer services for which the insurer received claims. With this, the consumers found for the first time that they could compare prices of doctors and know before hand what their medical bills would be. In fact in the US, following a Bush administration initiative,. several states have enacted laws mandating transparency in pricing by hospitals, healthcare providers and insurance companies, thereby seeking to provide consumers with better information relating to both quality of care and cost of services.

Likewise, in the United Kingdom, communication regulator Ofcom has been providing telecom consumers with comparative prices of various service providers, so as to help them make an informed choice and also promote healthy competition. Following the publication of a consultation paper in December 2001 on "Giving Consumers confidence in price comparisons of telecommunication services", Ofcom (then called Oftel) launched an accreditation scheme for Internet sites that provide price comparisons of telecom services, so as to help consumers get the best deal in terms of quality, choice and value for money.

In 2006, the European Regulators Group for Electricity and Gas came up with a proposal to introduce price transparency in electricity and gas services. The main objective was to create a condition for customers to make informed choices through transparent pricing practices , including prior notice of changing prices and comparison of prices charged by different service providers. In India, we too need to introduce transparency in the pricing of all our goods and services. And March 15, being the World Consumer Rights Day, is a good day to start the process and empower consumers. Like Ofcom, banking, insurance and telecom regulators can encourage and accredit sites that provide comparative pricing of different services by various service providers in these sectors. Such price comparison, coupled with ratings on quality parameters, would not only help consumers make an informed choice, but also increase competition among service providers. Transparency in the pricing of these services would also eliminate surprises in the billing – particularly in the mobile telephone services sector..

There was a time when banks were asked to display, for the benefit of consumers, the expected time taken for various services at the branches, such as cash withdrawal, updation of passbooks, etc. Those were the days before computers and ATMs when one had to stand in a queue even to deposit a cheque in a bank or withdraw some cash.

Now, banks should be asked to display at every branch, the charges for every service that they render. Many of them have posted such information on their Websites, but it would help consumers if they are also displayed prominently at bank premises. In fact, the Indian Banks Association should put out a comparative table of charges levied by different banks--both Indian and foreign. This will give a clearer picture of costs incurred by consumers for various services in different banks.

Similarly, hospitals, diagnostic centres and medical practitioners should display charges for every service rendered. Educational institutions should also be asked to declare in their advertisements calling for applications from students, the detailed fee structure and also their policy vis-à-vis refund of fee in case a student decides to move to another institution. In fact, transparency in pricing should become the norm in the services sector. In the manufacturing sector too , for a long time, consumers have been demanding that the manufacturers provide transparency in pricing by indicating the ex-factory price along with the maximum retail price. Manufacturers are, however, reluctant to comply.

Perhaps consumer pressure is needed to nudge manufacturers and service providers towards a more consumer-friendly regime..

Mentioning the price in advertisements promoting products and services would also help consumers compare prices Many years ago, the Delhi government had come up with a Bill to make it mandatory for every advertisement to indicate the price of the product being promoted.

Senior journalist, consumer affairs specialist