This developmental paper identifies a potential paradox in consumer protection regulation based upon the employment by a regulator of ‘coercive power’ upon those that transgress consumer protection regulation.
Whilst consumers have been shown to draw considerable reassurance from the employment of such power through the imposition of fines and other punishments, research in the field of tax compliance suggests that this is counter-productive and reduces rather than increases compliance with rules and regulations.
This paper proposes to examine the regulation of the UK financial advice industry where coercive power is regularly used by the regulator to determine if this paradox exists, and also to determine if an alternative approach based upon the employment of ‘legitimate power’ would be more effective.
Poole, A. (2015, September). Coercive vs legitimate power: A paradox for consumer protection. Paper presented at British Academy of Management 2015: The Value of Pluralism in Advancing Management Research, Education and Practice