Caveat emptor – let the buyer beware – no longer applies much, even in trade. But it has never been a useful rule for professionals.
Let the buyer beware, or caveat emptor, is a well-known principle, but is it still relevant in today’s world? If we think of how business reputations and brands are created and destroyed, we can see that caveat emptor is inappropriate and inadequate.
Back in 1943 a US legal expert wrote that caveat emptor, as a principle of the legal relationship between seller and buyer, was a pretty sick horse. Today, I think we can safely say if it is not dead, the horse has been confined to the stable of legal principles.
The world where producers were anonymous and secluded from customers is gone. Laws typically require sellers to behave so as not to mislead or deceive. Immunity for defective products has pretty much vanished.
Consumers increasingly rely on their shared views rather than a business’s messaging to ascertain reputation and value. Consumers can take action against what they consider inappropriate seller behaviour and products.
Regulators, interest groups, customers and the courts seem reluctant to allow sellers to wash their hands of their actions and pass the responsibility to consumers.
Today, we attribute responsibility to the seller – caveat venditor – let the seller beware. And sellers should be aware. Imagine a business that disregards consumers’ views and demands. How long could it possibly last? Adopting an approach of caveat venditor is not only about minimising legal risk; it is about survival.
“Imagine a business that disregards consumers’ views and demands. How long could it possibly last?”
Of course the fundamentals are very different in the accounting profession, as in any profession. While the sun has set on caveat emptor as a guiding principle in trade, I do not think it ever applied to professions.
The interests of clients and the public are the fundamental responsibilities of professionals. This is not paternalism. (Paternalism implies limiting a person’s autonomy or freedom in order to do something for their benefit, even if they would rather not have it done.)
Professionals are not asked to act in spite of their clients’ wishes. Accountants are empowered and trusted because they have expertise, which is required by clients, and professionals promise that it will be used in accordance with their ethical principles.
Imagine going to the doctor because you are unwell and not trusting that the diagnosis will be based on medical expertise and a desire to make you well. The value of going to the doctor is extinguished. The same goes for accountants.
The promise made is that accountants will act competently, honestly and objectively. If clients do not think that is the case, and that the accountant will have his or her own interests at heart and expects the customer to uncover information for themselves, then the value of seeking professional advice is lost.
Dr Eva Tsahuridu is CPA Australia’s policy adviser, professional standards and governance.
This article is from the July issue of INTHEBLACK