- Prices increased during forex shortages yet to be reduced after stabilisation
- NAO reveals significant shortcomings in consumer protection
- CAA Act to undergo a comprehensive overhaul
Consumer rights activists in Sri Lanka have raised significant concerns over the inadequacy of existing consumer protection laws, arguing that they fail to adequately safeguard consumers amidst economic challenges.
National Movement for the Protection of Consumer Rights Chairman Ranjith Vithanage spoke to The Sunday Morning, highlighting the plight of consumers in the local market, emphasising a lack of sufficient laws and weaknesses in law enforcement.
He pointed out that while there may be laws in place, their implementation was often inadequate, leaving consumers vulnerable to exploitation.
Economic pressures
Drawing attention to the sharp increase in prices of consumer goods during 2022 and 2023, attributed to foreign exchange shortages and import restrictions amid the economic crisis, Vithanage criticised businesses for not lowering prices even after economic conditions had stabilised.
He accused businesses of profiteering, stating that despite initial price hikes justified by economic difficulties, subsequent reductions were rarely seen.
He said: “Businesses were quick to justify price hikes, but have they bothered to reassess these prices now that the economic situation has supposedly stabilised? This pattern applies across the board – from food and groceries to IT products and construction materials. Have you seen prices coming down?”
Sri Lanka’s recent experience with soap price increases highlights potential gaps in consumer protection laws rather than their effectiveness. In April 2022, soap prices surged by more than 100%, despite a slight decrease in the dollar rate from Rs. 359 to Rs. 305. This substantial price hike – from Rs. 70 to Rs. 115 for a standard variety of soap, Rs. 75 to Rs. 145 for another brand, and Rs. 74 to Rs. 175 for baby soap – suggests limited regulatory oversight or enforcement mechanisms to prevent such sharp increases.
The fact that soap prices have stabilised between Rs. 165 to Rs. 185 despite the lower dollar rate underscores the lack of robust consumer protection measures in Sri Lanka.
Current challenges
Effective consumer protection laws typically include provisions for price control, anti-profiteering regulations, and avenues for consumers to seek redress against unfair pricing practices. In Sri Lanka’s case, the apparent absence of such measures may leave consumers vulnerable to arbitrary price hikes, particularly in essential product categories like personal hygiene.
The Consumer Affairs Authority (CAA) Act No.9 of 2003, established in Sri Lanka, replaced the Fair Trading Commission and Internal Trade Department to consolidate responsibilities aimed at protecting consumer rights and fostering fair market practices.
The act’s primary objectives include safeguarding consumers from hazardous goods and unfair trade practices, ensuring access to goods and services at competitive prices, and providing mechanisms for redress against exploitation by traders. It empowers the authority to issue directives and set standards under the Consumer Protection Act No.01 of 1979, thereby modernising and enhancing consumer protection in line with contemporary socio-economic needs.
Critical audit findings
The recent audit report from Sri Lanka’s National Audit Office (NAO) has exposed critical shortcomings in the country’s consumer protection measures. The report reveals significant delays in legal action against non-compliant goods, with 60 cases languishing for periods ranging from three to 22 months after inspections.
Moreover, mandatory standards through gazette were found to apply to only 16 out of numerous types of goods available in the market, leaving many products without essential regulatory oversight. The absence of sample inspections for 10 types of standardised goods further underscores gaps in quality assurance.
Additionally, unresolved complaints have plagued the Consumer Affairs Council, with decisions pending on seven cases dating back to 2015 and 296 complaints still awaiting resolution by late 2022. The report also highlights deficiencies in addressing agricultural equipment complaints and inadequate consumer notification systems. Furthermore, inadequate raid numbers relative to targets between 2018 and 2022, coupled with delays in filing legal cases post-raids, point to systemic inefficiencies.
Recommendations from the audit emphasise the urgent need for legislative reforms to strengthen consumer protections, enhance enforcement mechanisms, establish robust information management systems, and expedite complaint resolutions, reflecting a pressing necessity for comprehensive improvements in Sri Lanka’s consumer protection framework.
Legislative overhaul
As learnt by The Sunday Morning, the CAA Act No.9 of 2003 is set to undergo a comprehensive overhaul.
The proposed amendments, currently awaiting approval at the Cabinet level, seek to modernise and strengthen the existing framework to better address contemporary consumer challenges.
According to a senior official attached to the CAA, the initiative, spearheaded by regulatory authorities and supported by consumer advocacy groups, aimed to introduce robust mechanisms that ensure fair market practices and safeguard consumer rights across various sectors.
The official emphasised the need for a responsive legal framework that adapted to evolving consumer trends and technological advancements.
The official highlighted that the revised act would empower consumers with stronger protections and recourse while promoting a competitive business environment.
The proposed amendments to the CAA Act are expected to undergo thorough parliamentary scrutiny following Cabinet approval, with authorities optimistic about its potential to significantly enhance consumer welfare nationwide.
Furthermore, highlighting current market trends, the CAA official stressed that the authority continued to monitor market developments and remained in constant touch with the industry to ensure the best prices for consumers. The industry has recently raised several concerns, one of which is the cost of electricity. They pointed out that despite fluctuations in dollar rates, the cost of electricity and other factors determining final product costs had increased, leading to unchanged prices for most consumer items.
“Price control doesn’t affect this situation; even if we try to control prices, supplies drop and demand increases, creating scarcity. This is a very sensitive area. Simultaneously, we are attempting to balance demand and supply and reduce prices,” the senior official claimed.