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 Jewellery Buyer's Guide

Why is there a need for change?
The New Unfair Consumer Regulations are due to come into effect in April 2008. They are intended to boost consumer confidence and should not provide any fears for legitimate businesses.

Very few businesses set out to coerce or mislead people into buying something they do not really need. If this does happen unscrupulous, over-zealous and uninformed traders are held in check by a raft of consumer protection laws. From April 2008, however, most of these - including the Consumer Protection Act - will be replaced by a single piece of legislation. The new Consumer Protection from Unfair Commercial Practices Regulations will provide the basis for business conduct rules across the EU for the future.

An Important development
The new Regulations will be one of the most important pieces of consumer protection policy to be drafted in the last 40 years. The intention is to simplify much of the existing trading standards legislation, making it easier to understand and implement. The Directive allows for cross-border enforcement, an area where there are currently gaps. For example, if people return home from a holiday in Spain and they believe they have been cheated in some way then they can report this to their local trading standards service who will be able to investigate it.

The new Regulations will be important for three main reasons:

  • to strengthen consumer protection by introducing a general prohibition on traders from trading consumers unfairly.
  • to harmonise unfair trading laws protecting consumers in all EU Member states.
  • to prohibit businesses from misleading consumers or subjecting them to aggressive selling techniques.

How will it work?
The Directive contains clear rules to determine when a commercial practice will be deemed unfair.

General prohibition
An "unfair commercial practice" is one that runs contrary to the requirements of professional diligence and which materially distorts a consumer's economic behaviour or is likely so to do.

Misleading and aggressive practices
The vast majority of commercial practices defined as unfair under the general prohibition will fall into two categories; they will be "misleading" and/or "aggressive". It is hoped that this will create greater legal certainty, so the ways in which a commercial practice can stray into this territory is set out in detail.

A misleading commercial practice will contain false information or will in some way deceive the consumer into taking a transactional decision that would not otherwise have made. An aggressive commercial practice achieves much the same outcome but by means of harassment, coercion (including physical force) or undue influence so as to significantly impair (or be likely to impair) the e consumer's freedom of choice or conduct.

How will it affect businesses?
Businesses, as a minimum, will need to:

  • Review existing consumer-facing business practices to analyse their fairness, and to ensure that none fall within the 31 practices banned in all circumstances.
  • Consider not only actions but also omissions, to analyse if anything they are failing to do amounts to a misleading omission.
  • Review their relationships with other businesses to consider if they might be subject to the Consumer Protection Regulations (and, more broadly, the Business Protection from Misleading Marketing Regulations).

The key difficulty is to assess whether current practices are unfair. This will rely on a call of judgement and is open to interpretation. Corporate governance may require businesses to take a cautious view. If the trader is not professionally competent or they impair the consumer's ability to make a buying decision, then they are in breach of their duty to trade fairly.

The new regulations will be enforced mainly through civil injunctions to stop the bad practice and fines of up to £5,000 for each offence. But serious or repeated breaches could bring a criminal prosecution.

What action needs to be taken?
Businesses are also likely to run into trouble for doing things that some firms might consider fair game in a competitive environment. An example of this is to use a name or packaging that is similar to a competitor. These are not necessarily mainstream criminal practices, just tactics that confuse people or put false pressure on them to make an immediate decision. These regulations are about ensuring the consumer is clear what they are doing. The intention is to stop traders saying things that are not true which affect the decision the consumer makes.

While the Unfair Trading Regulations will simplify the legislation surrounding consumer rights, it will sit along side legislation governing the quality and suitability of goods and services, as well as consumer credit, direct marketing and distance selling regulations. Now is an opportune time to review sales procedures, review marketing policies and to put into practice procedures to ensure employees understand what constitutes unfair commercial practice. Another way to avoid difficulties is to develop a good relationship with your local trading standards officer.

We would like to thank Wragg & Co and HIE for help with this factfile.

Please note that N.A.G. FactFiles are provided for general guidance only and should not be taken as a substitute for independent professional advice specific to your business situation.

General


Lifestyle

Twenty-first century lifestyles are pretty hectic, this can be at odds with our precious jewellery which needs to be cared for. After all who would ever describe jewellery as cheap? Don't wear your jewellery 24 hours a day, take it off when you get home or at least at night. Keep it separated as different elements can damage each other. When you are not wearing chains and necklets keep them fastened so they don't get tangled. When you are doing jobs around the house, gardening, DIY etc. remove it, you wouldn't wear your Escada dress or your Paul Smith suit when cleaning the kitchen floor or working in the shed!

Jewellery can also be damaged by shopping trolleys, dog leads, prams, door handles, handbrakes, even washing-up. Diamonds maybe forever, but they and all other jewellery components can and do get damaged. Jewellery care is a necessary part of owning it.

Maintenance

Get your jewellery cleaned and checked at least annually by a National Association of Goldsmiths' member. They will be able to recommend any maintenance required, before you suffer any expensive loss. Don't attempt to clean jewellery using any form of chemical or an ultrasonic cleaner yourself, you are likely to do more harm than good. Some gemstones and settings should not even become wet.

Valuation for Insurance

Have everything that you would make a claim on in the event of a loss, properly valued for insurance. Use a National Association of Goldsmiths' registered valuer who will give a thorough and professional service.

The description on a valuation should be detailed enough for a jeweller to draw a pretty accurate sketch of an item.

Most valuations these days come with digital images included to aid the insurer, the Police as well as the owner, when it comes to identification in the event of a loss or recovery.

Have the valuation updated regularly as jewellery and its replacement values do not follow the practice of index linking as some insurers believe.

In the event of a loss, insurers sometimes insist you get the replacement from their choice of supplier. Should you rather replace lost pieces from your jeweller, ensure you read all the conditions in the policy before signing it.

Do also bear in mind that in the case of any loss, sentiment unfortunately cannot be given a monetary value.

Chemicals

Certain chemicals can harm your precious items, we use some of them so often we don't think of them as chemicals. Hairspray, perfume, nail varnish remover, even perspiration can all affect jewellery. If you are going to wear hairspray or other cosmetics, put them on first and give them a chance to dry before putting on your jewellery.

Chlorine is particularly damaging, so if you are going swimming leave your jewellery locked in the safe at home. No safe? They are available for less than the price of a tank of petrol, how does that compare to the price of your engagement ring?

Allergies

A number of people have suffered an allergic reaction when wearing jewellery. Often heard was the phrase 'I'm allergic to 9 carat gold'. This is not the case, Gold is a noble metal, it is not possible to be allergic to it. The allergy stems from a reaction to other alloys used e.g. the other 15 carats in 9 carat gold (total 24 which would be pure). Most often the allergy comes from nickel, which has now been outlawed in the Nickel Directive. The above explanation also covers allergic reaction to sterling silver.

The Metals


Platinum

Often referred to as a hard metal, this can be misleading. Pure platinum is in fact softer than pure gold, it is the other constituents of the alloy that make it hard wearing. The most common 950 (95% pure) alloy is the hardest of the precious metals used in jewellery. What mustn't be forgotten is that even so, it is far softer that other common metals, for example steel and chrome.

Platinum is very durable and takes a fine polish that is resistant to wear. It is naturally a greyish white and is often rhodium plated to make it even whiter. It requires a higher level of craftsmanship and also being rarer than gold, explains why it is worth the extra expense.

Gold

Many believe, including some jewellers, that the higher the carat of gold the softer the metal (gold is a soft metal). Thus 9 carat gold, being alloyed with other metals tends to be more resistant to scratching than say 22 carat gold. This is not necessarily the case. Many manufacturers producing 18 carat gold jewellery ensure that, as the jewellery is higher quality, the alloy is harder wearing. This way when you have bought a piece of fine jewellery it will last a long time.

Silver

Silver is one of the precious metals. It can achieve a great polish and does not tarnish in its pure form. Most silver jewellery is silver combined with other metals as an alloy. This makes it more suitable for general use. Sterling silver, like some other precious metal alloys, can oxidise over time. Properly maintained silver jewellery improves with age and develops a beautiful patina. Treat your silver well, care for it properly and it will reward you with a long life and a special look.

Other Jewellery Items

Watches

Your watch is a very intricate piece of engineering and works non-stop day after day. You would not expect your car to do this without a service so follow the instructions on servicing. As a guide a service every three or four years should help it last for decades.

Give your watch a quick check on a regular basis, making sure that the strap or bracelet is securely attached to the case.

If you have a mechanical watch wind it in a clockwise direction. Often it is recommended that you do this about the same time each day. Remove the watch from your wrist when winding so as not to place undue pressure on the winder.

Water resistance is often misunderstood, for example a watch saying 30 metres on the dial sounds like it is perfectly safe to swim in. The 30 metres is actually a static pressure that the watch can take. Did you know that just jumping into a pool can exceed this pressure therefore possibly letting water into the watch? If you really have to know the time when you are in the pool, it is recommended that you have a watch with a 100 metre water resistance or greater. Even then don't wear it in the bath or while taking a shower.

Pearls

Cultured pearls are formed inside oysters. As they are of organic origin, although they are beautiful, they are particularly susceptible to damage. For this reason you should treat cultured pearls with great care.

Cosmetics including perfume and hairspray should be applied before you put on any cultured pearl jewellery, otherwise the nacre or skin, can become permanently damaged. After wearing, clean them with a soft dry cloth.

Should you need to wash your cultured pearl jewellery, do it with water and maybe a drop or two of detergent. Obviously don't get cultured pearl stud earrings wet as it may affect the pearl cement.

Don't use any form of chemicals, as they are most likely to damage the cultured pearls. Cultured pearls are soft and any rough treatment such as carrying in a handbag or putting them loose in a jewellery box may also damage them. Wrap them in acid-free tissue for protection.

Everyday wear, and the natural constituents of your skin can have a detrimental effect on the silk used to thread your cultured pearls. Get a National Association of Goldsmiths' member to check them regularly. The frequency of rethreading depends on many different factors, but once a year is a good idea.

Natural, Enhanced, Manmade, Synthetic, Created etc.

It is all very confusing for those not 'in the know'. Natural is relatively simple, this would be a gemstone that is entirely in its natural state other than being cut and polished.

Enhanced is a term used for natural gems that have been improved by man in a permanent way. This has been going on for over 1oo years and is an accepted practice that doesn't require mentioning to the public in most cases. An example of this would be the colour improvement in zircons in Victorian times. There are however some enhancements that do require description. An example would be the lasering of diamonds to remove inclusions (nature's fingerprints). Travellers buying diamonds while on holiday in America for example, are often sold these without any declaration (a very good reason to buy instead from a National Association of Goldsmiths� member back home).

Manmade and synthetic gems are simple to define, though there are many terms used to try and detract from the fact that these are grown in a laboratory. Created or Kimberley are terms that are commonly met.

When you leave your jewellery for appraisal your jeweller will need to know the purpose for which you require the finished valuation. Items of jewellery are valued differently for different purposes. You might wonder about the gap between the insurance value of an item and the amount you would get, as a private individual, if you chose to sell the pieces: consider the following.

Insurance Valuation
This type of appraisal will show the full retail replacement value, "as new" or "as antique" of your jewellery, VAT inclusive, taking into account the nature, quality and design of the pieces and the sort of shop likely to be able to provide comparable replacements in the event of loss. It is, therefore, a representation of the highest value of your goods.

Probate or Confirmation of Will
Unlike an insurance valuation which indicates the full retail replacement value, this lower assessment is based on amounts likely to be achieved at auction or by selling your jewellery to the trade. It is determined by the worth of the materials, pre-vailing tastes and the condition and state of wear of the items.

Sale Between Parties
Such an appraisal is made with due regard to two persons, the buyer and the seller - often they are friends. The prospective buyer is seen as entitled to a "bargain" since he is not being offered the customary guarantees of a reputable jeweller. The seller is seen as reasonably expecting a better price than he would get from selling to the trade because the jewellery will not subsequently be required to produce a profit for the jeweller.

Security Against a Loan
The interests of the two persons involved in the transaction make it essential that the valuer guards against dissatisfaction should it become necessary to sell the jewellery. In most cases the valuer will set aside style and artistic appeal and the appraisal will be based on the worth of the components of the jewellery. Obviously there are exceptions, but such a valuation must give the lowest representations of the value of your jewellery.

In the light of the above it is evident that the retail jeweller, when offered items to purchase, must consider buying at a figure substantially below the insurance value of the goods if he is to remain in business. But how much below? Often an old, beautiful and unusual item will excite the retailer more than a recently mass-produced piece. This is because the jeweller probably has regular suppliers of newly-made jewellery who can offer him credit, give him guarantees and exchange items which don't sell reasonably quickly. A similar item bought from a member of the public has none of these advantages and it does have some disadvantages: it must be sold at a conspicuously second-hand (ie cheaper) price in a highly competitive market where it attracts the same rate of VAT as brand new jewellery. Additionally, if it is the sort of piece your jeweller usually stocks he probably already has something similar; and if it is not his normal style he might not have a ready market for it. Such con-sideration governs the price you are offered and account for the divide between insurance value and "what you get" if you sell.

The reputable jeweller does not suggest that you buy jewellery for investment; but he might point out to you that in twenty years time your jewellery will stand up well compared with your old television, should you wish to sell.

This fact file summarises the changes that the new regulations will introduce. It also explains the purpose of the anti-money laundering regulations, explains why they are changing, and sets out sources of further information.

Money Laundering Regulations 2007
The new anti-money laundering regulations will take effect in the UK on 15th December 2007.

Why do we have anti-money laundering Regulations in the UK?
The UK faces serious and ever changing threats from crime and terrorism, and finance is the lifeblood of both. Our strategy is to detect, disrupt and deter crime and terrorism through a range of strategies, including measures to restrict criminal access to the financial system.

The UK is part of a wider international effort to meet these challenges, and participates in international talks to make sure the rules remain effective. New international recommendations were issued in 2003, and in turn the European Union adopted the Third Money Laundering Directive. The Government is now implementing new Regulations in the UK to give effect to the European Directive.

What are the rules?
The Money Laundering Regulations require firms to put preventative measures in place. They require firms to ensure that they know their customers (including conducting customer identification and verification and undertake ongoing monitoring where applicable), to keep records of identity and to train their staff on the requirements of the Regulations. The Proceeds of Crime Act 2002 and the Terrorism Act 2000 provide the criminal offences of money laundering and terrorist financing and impose obligations on firms and individuals to report suspicions of money laundering or terrorist financing.

What is changing?
In summary the new Regulations:

  • provide more detailed obligations regarding customer due diligence, for example, explicit requirements for firms to undertake ongoing monitoring of business relationships and for firms to identify not just the customer but the beneficial owner of the customer
  • require firms to vary customer due diligence and monitoring according to the risk of money laundering or terrorist financing
  • require firms to take enhanced customer due diligence measures in higher risk situations, while allowing firms to take reduced identification measures for specific situations with a lower risk of money laundering
  • allow firms to rely on certain other firms for undertaking customer identification; and
  • clarify the arrangements for the supervision of firms, including those that will be supervised for the first time.