AirNoService
In the US we do not suggest headings to VFR's if we think that they are going to hit someone, we issue a traffic alert and give them an instruction. If they are in class E airspace and getting advisories from us then they are REQUIRED to obey the ATC instruction. Now that said, if they are really stupid, they can cancel advisories and do what they please. We are then not obligated to do anything with the VFR who we are not working, but we are going to be obligated to give a traffic alert to the IFR pilot who appears that the targets are going to merge at same altitude. But again we are not going to give them a thousand feet and three or five miles depending on who is working them. We only have to not trade paint.
It works quite well and is rather simple. As to pilots knowing where they are at, well they are required to know where they are at and what level of service is being afforded. But again in the US that is pretty simple and straight forward.
regards
Scott