Saturday, 4 October 2014

True to label

In modern commerce, product or service description is a very important practice as consumers rely on these labels in making purchasing decisions. As commerce becomes more complex and the products and services themselves grow in complexity, labelling is regulated in many countries in addition to sales practices.

When we buy a car, we expect the car to have a reasonably functional engine with all other parts operating as what they should. When a brand new car has no engine, irrespective of how other parts are working, a car would not function like a car. So, what appears to be nice may not be so if there is something wrong in the manufacturing processes. Here, a car without engine is not about defects in processing but a pure cheating case. Of course buyers are expected to test drive the car before deciding whether or not it should be purchased. Failing to do so exposes them to the risk that the car has no engine.

In the financial services industry where products literally could vanish into the thin air if poorly constructed using poor quality assets, being true to label is something that regulators would expect religiously (this may no longer be appropriate as religion itself is being ignored in many societies). This is the reason why some of the products need to be approved by regulators, especially if they are sold to retail investors who are not expected to have the sophistication to understand the product details. Given that these products are purchased for many reasons such as retirement planning, it is important that the risk factors associated with the products and the way they generate returns are properly disclosed in the ways that could be understood by would be investors.

The important of product labelling goes beyond just cars and financial assets. One of the major investment made by most people is education. Not only attaining education can be costly, the whole journey could be fairly lengthy. Just recall how long we were required to go though the schooling system before we  were eligible to attend colleges and universities. I am sure all politicians in all countries would be promising high quality affordable education as a reason why they should be elected. Hence, the issue of being true to label would be applicable to them as well, I suppose.

I have been on advisory boards of a number of tertiary education programmes offered to public. On of the tools to promote those programmes are through prospectuses issued by the relevant institutions of higher learning. Just go and pick one, I am sure there are many nice words being used to describe what the programmes entail. Shouldn't these prospectus be subjected to the same expectations that they are true to their labels?

To me, offering education programmes is similar to selling dreams. Prospective students are allured to the programmes on the promise that they would have good job and career prospects. In fulfilling their dreams and in believing the promises made, people eventually enrol into the promoted programmes.

What if they fail to attain what were promised? Who is going to be responsible for their shattered dreams? Worse, some of them would only realise that these promises are not true much later when they realise the qualifications that they have would not allow them to progress further at the workplaces. Perhaps, equating a degree to a professional qualification may risk such line to be crossed especially when there is no such practice being applied in a particular industry globally. If universities could be ranked, even the degrees may not fit to be grouped together when the universities awarding those degrees are not at the same ranking. In situations when a university is not even ranked, such concern would be amplified!

Islam is very strict about business transactions and there are series of rules about this. References here would be handy in understanding how much Islam values trust and ethics in commerce. Some of the prohibitions are very clear about the needs for vendors to sell products which are true to their labels. It would be interesting to observe how many Muslims realise this and apply the concepts at their workplace. Given the multi dimension of commerce nowadays, the requirements and prohibitions are not limed to goods only but the concept have to be applied across all aspects of commerce to the extent that they are applicable.

So, for Muslims out there who are trying to promote their products or services beyond what they truly are, you may be crossing the line of your own faith.
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