An Irish Consumerist

Happy World Consumer Rights 2010.

2010-03-13T09:13:00.004Z

It gets slightly overshadowed here by another big day in the middle of March, but in case you don't know today, Monday March 15th 2010 is World Consumer Rights Day. You might wonder why this date, well it all stems from a speech by President John F. Kennedy to the Congress on consumer rights on March 15th 1962.

This year the theme is "Our Money, Our Rights" How the global consumer movement is fighting for fair financial services. The theme is timely here in Ireland. We have seen the devastation caused by a banking and financial system out of control. The real victims are the citizens and taxpayers, who had to bail out a system with their taxes and now are paying on the double with increased interest rate charges, increased fees and commissions and less competition. Even leaving aside the near collapse of the system, we need consumer protection and regulation to protect ordinary consumers from the everyday hazards of engaging with financial institutions. I am sure some will accuse me of being the proponent of a "nanny state".

Well I would argue for stronger consumer protection in the area of financial services on two key points. Firstly financial products are what the academics call "credence products" essentially it is hard for the consumer to evaluate the product and their value will only become know over time. The advantage lies with the financial service provider, in most cases consumers are hoping they are acting in their best interests. Unless there are laws and rules there forcing the seller not to take advantage, they will, as we know only too well. Secondly, when things go wrong it can have a devastating effect on the consumer. Bad advice can lead a consumer to take out a loan they can't repay, investing their life's savings in a bad investment, etc, etc. The impact can be severe and significant.

However there is hope that we can rebuild not only a better and stronger banking system, but also a fairer one. Sometimes when you read the reports coming from banks or the financial press, you would get the impression that the banking system solely operates to meet the needs of executives, shareholders and large investors. However the banking system should be there too to meet the needs of ordinary consumers and small businesses.

I met Matthew Elderfield last Monday, when he came and spoke at the Consumer Panel meeting. I was impressed and hopeful for the future. He laid out a very clear, yet ambitious programme, along the lines of the speech he delivered last Thursday. He made some important points, including the fact that consumer protection would remain at the heart of his work and that the new focus on consumer protection was some how to blame for the failure of prudential supervision. I also liked the fact that he is committed to a review of the Consumer Protection Code and to taking a much tougher line on enforcement. However it is a challenging agenda and there will be strong resistance from the vested and well connected interests.

The man responsible for March 15th, great orator, but just wished he hadn't picked St. Patricks Week!

The reform agenda is massive, on the prudential supervision side alone, a lot of work needs to be done. On the consumer protection side, the review of the Consumer Protection Code is long overdue, the gaps and deficiencies in that need to be addressed and then the code needs to promoted among the public. I have been calling for this since it was originally launched in 2007, but for some reason the Financial Regulator has been reluctant to do this. Other areas of concern are diminishing competition, are we sacrificing competition at the altar of rebuilding the balance sheets of banks. We need to see a crackdown on overcharging and mis-selling. Every few weeks there is another overcharging scandal and the response by the financial institutions and the regulator to date has been slow. We also see the number of complaints to the Financial Ombudsman grow, much of it driven by mis-selling.

We are now dealing with the crisis in all types of debt, however we also need to look at how we can avoid such an orgy of credit being doled out by banks in a feckless and reckless manner in future. One measure would be to make irresponsible lending a crime, essentially financial institutions would be held accountable for giving loans and credit for which were hard to justify on the basis of the income of the recipient. The other area is the lack of independent advice driven by hidden commissions and fees to staff and intermediaries. While I accept the many consumers would be reluctant to pay for financial advice, at the very least they should know if and how much commission a bank employee, broker and intermediary is getting from a particular product or institution. And unlike many other European countries, we don't have provision here for a basic bank account that would allow consumers to have access to banking services without the hefty fees and charges. And I could go on and on....but I am still hopeful we can not only build a stronger and better banking system, but a fairer one as well.

Till debt do us part

2010-02-27T20:11:00.007Z

When I first left school and got a job in the early 1990s, it was still hard to get credit. I remember going to my local bank and credit union to get a modest loan to buy a car and had no joy. Looking back it was a good lesson, because it meant I had to save and wait and didn't get buried in debt.

Then in the space of ten years, everything changed, our society was flooded with credit. It wasn't a case of will I get the loan, the banks wanted to know if I was sure that was enough. I was involved in a campaign in 2007 with NYCI around the issue of credit card debt among young people, "Can You Credit It" Our campaign was a response to the mad situation where young people in college with limited incomes were being bombarded with letters and flyers encouraging them to take on €1,000s in debt. I remember Eddie Hobbs at the time describing credit cards as the gateway drug to a life of debt. It was only one aspect of the credit bubble in Ireland, but no-one in authority seem to care.

About ten days ago the Oireachtas Committee on Social and Family Affairs published a very good report on debt in Ireland, entitled "High levels of Indebtedness in Irish Society" No great surprise that it details the scale of the problem, with debt to disposable income rising from 60% in 1997 to 175% in 2007. Apart from mortgage debt, thousands are saddled with debts on personal loans, credit cards, utility bills etc. While many people overspend and over borrowed during the boom, they have learned their lesson and will over time repay and reduce their debt. However there are a minority whose life will be scarred by debt and arrears.

I have a mortgage and a credit card, but thankfully can make my repayments on time. I would hate to be in arrears and be fearing the call at the door or on the phone. I think that fear and hatred of debt comes from family history. In 1922 my grandfather, also a James Doorley, acted as a guarantor for a relative on a loan. The relative couldn't repay the loan and the bank in question put a charge on the deeds of my grandfathers land until all the money was repaid. The 1920s were not a time of great prosperity, and of course many still refer to the hungry 30s, indeed it was the time of De Valera's economic war with the UK. The deeds of our farm show that it was 1958 before my family was able to finally discharge the debt, when penalties, arrears etc were factored in. My grandfather went from being a fairly prosperous farmer to one who paid most of his profits (if there was any) in later life to pay off a debt.

Excellent series on the crisis by the BBC.

While much has changed in our country, the way and means by which we deal with debt hasn't. It's mad that people still go to jail for debts when killers are walking free. We all know that there are people who can afford to pay and won't, but the vast majority of people in debt can't pay. Through no fault of their own, people lose their jobs, have marital difficulties, suffer from ill-health and find the bills and debt mounting up. The moratorium on mortgage arrears of 12 months is welcome, but does nothing for people who have large personals loans, credit card bill, utility bills etc. Some financial institutions are responsible and do all they can to assist people, others just add to their borrowers woes with threatening letters, hefty legal bills and outrageous arrears fees and penalties. While I accept the borrowers must take responsibility for their actions and decisions, the lenders who threw money at people now deep in debt cannot get off scot free either. Yes we need responsible borrowing, but we also need responsible lending.

We definitely need major reform in this area. The Law Reform Commission produced an excellent report back in September, however I feared that it would be ignored like many of many of their reports. However someone was listening and it was good to see the commitments in the revised Programme for Government on debt and debt enforcement. Then just this week the Government announced the appointment of an expert group to bring forward measures on a rolling basis over the next couple of months. There are some really good people on this, who I worked with in the past and have a strong track record. Paul Joyce and FLAC have been tireless campaigners on debt reform for many years, indeed sometimes they must have felt voices in the wilderness. I worked with Brendan Burgess of askaboutmoney.com on the financial regulator consumer panel when he was chair, he is also an excellent choice, because he has been working and advocating on behalf of consumers in the financial area for many years. It's important to have the financial industry on board and although we are often on the opposite side of the argument, Pat Farrell is a pragmatist and in fairness supports reform in this area too. Good also that Matthew Elderfield the new Head of Financial Supervision at the Central Bank is on board, who really appears to have hit the ground running.

So hopefully we will see speedy and sensible solutions to our current debt problems. We can't wipe out debt, but we can make the system work so as to assist people deal with their debt in a more humane, speedier and satisfactory manner for all concerned.

A Golden Opportunity?

2010-01-25T10:01:00.005Z

The cash for gold market has really taken off recently. All of sudden we are being bombarded with TV ads, flyers in the door, stalls in supermarkets from companies offering to take all that unwanted gold off our hands for bundles of cash. Gold has always been an attractive commodity in times of financial and political turmoil and this time is no different, global prices have soared in the last year. This means there is a great market for scrap gold now. So in the middle of a recession it seems a bit of a no brainer, gather all that unwanted gold jewellery, stick it in an envelope and wait for the cheque in the post by return. The buyers can resell the gold for a tidy profit, so its a good news story all round.

Well it is not that simple, as it seems many people could be selling their gold at a fraction of its worth. When you think about it, in normal circumstances would you allow the buyer to dictate the price they are willing to give you? As with all new crazes problems arise, in the US, there has been a lot of controversy about one particular company highlighted by consumerist.com and alleged wrongdoing. Here Senator John Paul Phelan of Fine Gael has also rightly raised legitimate questions concerning the regulation of this activity and the potential for it to increase burglaries and theft. Senator Phelan is proposing a private members bill to deal with this. Although if there is evidence that some companies are using sharp practice, then that could be tackled under the existing provisions of the Consumer Protection Act 2007 dealing with unfair and misleading commercial practices.

Like the Cash for Gold craze...Glee is the latest TV craze, no TV channel is safe!

However there is no law against illogical consumer behaviour and if people insist on sending their gold in the post without any idea of its value and accepting whatever price is offered, then no surprise if companies buy it as cheaply as possible. According to one company in the US 94% of customers accepted the offer given. However a very recent survey by Which in the UK found that most of the TV cash for gold operators offered poor value compared to pawnbrokers and jewellers. Now obviously no one would expect to get the retail value of the gold, but most of the cash for gold operators were only offered about 6% of the retail value of the items, compared to about 25% from the jewellers/pawnbrokers.

The lesson here is to do a bit of work. Find out the caratage (quality) and weight of your scrap gold. This expert gives great advice on what to do. Some of the companies involved provide online price calculators, so you have an idea of the price being offered. I came across this site which gives information on the value of gold based on weight and quality, they don't claim it is perfect, but it might give you some ballpark idea of values. If all that seems a bit too challenging, at the very least take your scrap gold to a pawnbroker or jeweller to get a valuation. As the seller of a now even more valuable and sought after commodity doing some leg work gives you information, choice and bargaining power and will probably ensure you get more for your gold!

Premium Discontent!

2010-01-17T14:03:00.003Z

The recent bad weather with the floods in November and the snow and ice of Christmas and New Year brought misery and hardship to many individuals, households and communities. I cannot imagine what is must be like to have your home flooded either as the result of torrential rain or by bursting pipes.

As people start to get their lives together, many turn to making insurance claims for the damage caused. President McAleese has rightly called on insurance companies to process these claims speedily. That is why people pay considerable sums to them each year to ensure that when a disaster strikes they have some financial compensation. The IIF have already stated that the floods in November will cost €244m. Most of these claims relate to commercial property damage with €77m being claimed by domestic customers. However it is important to remember that this is what is estimated and these are claims, some claims may not qualify.

No doubt the recent bad weather will be used as a further excuse by insurers to hike premiums in 2010. But hold on a minute, that is what insurance is there for. Insurance companies are meant to factor in potential inclement weather into their prices. The possibility of flooding and snow and frost are hardly unexpected. Indeed it could be argued that up to this winter, we have had a spate of very mild winters. Using the recent bad weather as a cover to further hike prices shouldn't be entertained.

This is especially so when we know from the CSO that home or dwelling insurance and motor insurance went up by 16.8% and 10.1% respectively in the 12 months to December. This is against the background of 5% deflation. So what is going on here? The insurance industry will say "prices came down between 2002 and 2007 by 45%, so they had to start going up at some stage". What they don't tell us of course is that prices skyrocketed between 1997 and 2002 going up by over 61%. Most of the fall in premiums can be attributed to the introduction of the Personal Injuries Assessment Board, which led to a significant reduction in the cost of claims for insurers. The extent to which those savings were passed onto consumers is something which I would have concerns about.

Funny Ad...but the bad weather and price hikes are not as humourous!

Likewise you will hear guff about the increasing cost of claims, fraudulent claims and the extra 1% Government levy. Yes the levy has gone up by 1%, that's just 1%...what about the other 15%? The claim about increasing repair and building costs is balderdash, it must cost half what it did 3 years ago to get any repair job done. So I don't buy that one. On the fraudulent and exaggerated claims, well they have to provide proof for that, but again a useful cover for price hikes.

I have no doubt that profits in the insurance industry are down in 2009 and will be down in 2010 from the dizzy heights of the Celtic Tiger, but that is the case for every business and sector. Insurers will have to take some of the pain instead of passing it on to consumers and businesses. Historically profits here far exceeded those in the UK, in 2002 it was found that motor insurers in Ireland had 11 times the profits of their counterparts in the UK. Also the Financial Regulator Annual Reports (Page 134) show that based on competition indicators the market here is not competitive.

What needs to be done. Well we need scrutiny by the Financial Regulator, Government and Oireachtas. The Regulator could start by producing more reader and citizen friendly reports on the Industry. The annual statistics on the Insurance Industry (called the Blue Book) are turgid and difficult reading, the contain some interesting data, but it is hard going. It also doesn't address issues like how much of the saving of PIAB were passed onto consumers, or are premium increases justified based on the data available. So we need more and better data.

The Government has a vague commitment in the most recent revised Programme for Government about ensuring consumers get the benefits of competition in the insurance market. Based on a response by the Minister for Finance a review will be conducted, but when and by whom is not clear. The Oireachtas can also play a role in that the Enterprise and Small Business Committee could hold hearings and invite the insurers to outline and explain how they can justify the current increases. It would be all too easy with the focus on the banks, for the insurers to hike prices and their profits while the glare of the media and public was elsewhere.

Watch out for snake oil salesmen online!

2009-12-12T13:41:00.004Z

I came down with a bit of a lung infection during the week and in the course of doing some online research on my ailment, it struck me how many companies are advertising drugs of one sort or another on the web. I never even thought about buying drugs online, seems a bit mad and unsafe to do so. I suppose it should have struck me because my junk email account is full of spam emails selling Viagra.

You can buy non-prescription drugs online, but many of these are available in shops/pharmacies and are generally occasional purchases, so I imagine the online trade in these is minimal. It is of course illegal to buy prescription drugs online for many good reasons. However it would appear that many people do it. Apart from the dangers of self diagnosis, you don't really know what you are getting. You could be paying good money for flour or starch or something a lot more dangerous. If you are not sure about the status of a particular drug, such as whether it is prescription or non-prespription, best to check the Irish Medicine Boards website where they have a database of authorised drugs on sale in Ireland.

Beware the online snake oil salesmen!

I see the Revenue Commissioners intercepted 3,000 items which contained 393,067 prescription pills in 2008 which were purchased over the web. Across the EU the number of sales is staggering, according to the EU Commission over 34 million fake tablets were intercepted in 2 months.

It would appear the market for so called "embarrassment drugs" such as Viagra is high. Many people are still too embarrassed to talk to their doctor about some conditions. This issue needs to be tackled on 2 levels. On the prevention side there is merit I think in a public awareness campaign advising people of the dangers involved. In these times of economic stringency, hard to expect Government to pay for this. It would appear to be the sort of thing that pharmacutical companies cound fund, it would be in their interests to reduce this trade. On the supply side greater efforts need to be taken by public health and enforcement agencies to track down and close down these online snake oil salesmen.

Bleak Houses?

2009-12-08T19:40:00.004Z

The good news for many in the private rented sector is that prices are now back at 1999 levels. There is a lot of supply and those in the market can pick and chose. It is likely though that the tax on non-principled private residences aka second homes will be increased in the Budget tomorrow. A lot of landlords have numerous properties, so they may try and pass this cost onto the tenants. Also the Commission on Taxation recommended the abolition of the rent relief for tenants, it may not be awful lot, but for many on tight budgets was a help.

Hopefully conditions are better now!

However for many people and families on low incomes and on social welfare, the cost of renting has bizarrely gone up, despite the fact that they can least afford it. People in this category get state support in the form of rent supplement, 91,600 or 24% more than last year based on recent figures from the Department of Social and Family Affairs. Changes in the last Budget, mean that not only have tenants to pay more as part of their contribution to the rent, many also have had to top up the "official" state payment as this was also reduced in the Budget and landlords expect tenants to make up the difference. I fully understand why the Government cut their contribution, rental costs were coming down across the economy, so why not in this sector as well. However in many cases the landlord didn't accept the cut and turned to the tenant to make up the difference. You might wonder why in the current market people just don't up sticks and leave rather than pay above the market rate. I am sure in some cases people have, but not all landlords will accept tenants on rent supplement for a variety of reasons, so there is no guarantee that they will get alternative accommodation.

Also some people and families on rent supplement live in sub-standard accommodation. Earlier this year the Government to their credit did introduce higher standards for private rented sector accommodation and last week they brought in further improvements. However many of the new provisions do not apply to existing rental properties until 2013. Some landlords will meet the criteria and treat people properly, however some will try and avoid their legal obligations. That is where the local authorities come in, they are supposed to inspect rental properties in their areas. Some have a great record, over 50% of registered properties, however 17 out of the 34 local authorities inspect less than 5% (see table 37) of properties to check that they meet the current minimum standards. So the chances of dodgy landlords being caught are slim.

Organisations like Threshold do an excellent job in supporting tenants on a very limited budget, however the local authorities need to do more and carry out more inspections (at least 20%) to ensure that tenants get decent living conditions for the millions which is being spent by the state for these properties.

Traffic Lights...the right road for food labelling.

2009-12-06T14:54:00.003Z

There is a big battle going on in Brussels these days that gets scant attention in the national press, but which will have major implications for consumers and their health for years to come.

In January 2008, the EU Commission introduced a proposal for a new directive to reform how food is labelled across the EU. The proposed rules will require manufacturers to put nutritional information for 6 nutrients (energy, fat, saturated fat, carbohydrates, sugar and salt) on the front of packaging.

New regulations are badly needed. Just this week the Food Safety Authority published a report on consumers experiences and preferences when it comes to food labelling. Almost 50% always or usually look at the labels, mostly to check nutritional, calorie content and ingredients. I have to be honest and say that I am among the 50% that doesn't do this very often, either because the print is very small or because the information is very technical and of little use. However I will make a New Years resolution....3 weeks early to start from now on! Although I am a sucker for the foods, such as biscuits labelled as "low fat". I know I am kidding myself into thinking chocolate biscuits are not fattening!

The research showed that 87% felt that nutritional information was very important or important and 81% of consumers want information on the health impact of alcohol on labels. Of most relevance to the debate raging in the EU institutions at the moment, they asked people about whether they preferred the Guideline Daily Amount (GDA) system or Traffic Light system for nutritional information. Here the response is a little confusing as they presented 4 options, but overall 39% preferred the traffic light system. However the suggestions that any new regulations could be a mixture of both was voted down by Irish consumers. The report does appear to show that consumers are taking more notice of the nutritional information on the packaging than before.

The traffic light system was developed by the Food Satefy Agency in the UK and would require manufacturers to put a red (high), yellow (medium) and green (low) symbol on the packaging depending on the levels of salt, fat and sugar in the product. The GDA system was developed by the Food Industry and consists of symbols with percentages of fat, sugar etc in the product based on the average daily amount for an adult.

I like traffic lights...unless they are red of course!

BEUC and other consumer and health advocates want the traffic light system for fat, saturated fat, sugar and salt because it is much clearer than the percentages GDA model. Of course the food manufacturers and processors are against this because no company wants to have red light symbols on their packaging. However the best way around this of course is for them to reduce the amount of salt, sugar and fat in their products. So not only will the traffic light system help inform consumers as to the levels of these substances, it will also force manufacturers to change the contents of their products which will be good for everyones health.

This is an important debate and issue. Several reports and studies have shown that consumers are not aware of the levels of fat, sugar and salt in many of the products they eat. The Dispatches Show on Channel 4 did an excellent programme on breakfast cereals recently. When they poured the equivalent of what the children were consuming in sugar into a bowl (300grams) a week, its easier to understand why we have an epidemic of obesity.

Therefore it is important that the EU Commission and all involved in the development of these new food labelling regulations make sure that the health needs of consumers are put before the interests and profits of the food industry. In particular our elected representatives in Brussels, our MEPs have an important role to play, lets hope they take the traffic light approach on this particular road.

Breaking for the Border!

2009-12-04T14:31:00.007Z

Today the CSO published a major report on the extent of cross border shopping. They calculate that shoppers here spent about €435m in Northern Ireland between June 2008 and June 2009. They provide details of the numbers of households travelling north, the regions they are from, the amount they are spending and what they are buying.

Given all the hullabaloo about cross border shopping, it is good that we have independent and extensive data on which to make conclusions and of course to enable the Government to make the right decisions in response to what they see as a problem. I accept that cross border shopping is costing the State revenue, which of course pays for public services. However cross border shopping is a world wide phenomenon and as even the CSO and Revenue report in February noted it was not a new phenomenon here. I would argue that cross border shopping is actually a good thing for our economy as a whole in the long term, because it will force retailers to adjust their prices to retain customers fleeing to the North to escape high prices. That will be good for consumers and competitiveness.

Lithuanians crossing the border to shop in Poland.

The first thing that struck me was the large difference between what the CSO estimate is spent in the North by shoppers and what other reports have estimated. While the data from the CSO and Nielsen is at one on the numbers of households travelling North at around 16%, they differ a lot on the other aspects. CSO says that the spending was in the region of €435m, whereas others such as InterTrade Ireland claim that the overall cost to the Republic's economy as a whole will be in the region of €810m this year. Obviously spending and cost to the economy are not the same thing, but both figures cannot be correct. Much of the spending is on food which is VAT exempt, so the loss to the State is on increased profits and knock on employment taxes, but surely an expenditure of €435m, the vast majority of which is on groceries cannot stretch to €810m? ABFI are interpreting the Nielsen figures as representing a loss of €400m in taxes and excise for the State. Again I don't know the basis for these figures, but they seem very high based on the CSO data.

People and commentators can believe what they want, I have to say I have more faith in the CSO data because the Quarterly National Household Survey is based on interviews with 39,000 households. Also, the CSO does not have an agenda, unlike the drinks and retail industries who have been fleecing consumers for years and are now getting a pay-back for the price pain inflicted on consumers here.

We are led to believe that the key driver of cross border shopping is the price of alcohol. The conventional wisdom is that shoppers endure the trip and long queues to stock up on vast amounts of alcohol. I have no doubt some people do go North to buy alcohol, but is it the key reason? The drinks industry in the shape of ABFI would like you to believe it is. Of course, this also suits the retailers as it deflects attention away from the high cost of groceries. They want the Government to cut excise on alcohol by 20% in the Budget. However the actual data from CSO would appear to undermine that argument. It shows that ;

80% bought groceries on their most recent trip, while only 44% bought alcohol.
Of the average household spend on cross border shopping of €286, only €32 or 11% was spent on alcohol, not the vast sums we are lead to believe.
Consumers from the border region are the key group where business is being lost, they are more likely to travel to Northern Ireland to shop and more regularly-41% of border households compared to national average of 16%.
They are also frequent cross border shoppers, 5.9 trips on average in the last year compared to the 1.1 trips national average.
Border shoppers are primarily going North to buy groceries, they had the lowest spend on alcohol and the 2nd highest spend on groceries.

This suggests in my view that even if the Government reduces excise on alcohol, it will have limited impact on cross border shopping. The key driver is the high cost of groceries. So if excise on alcohol is reduced, we could end up with a scenario where the State will lose further revenue and cross border shopping will continue. If the Government want people to spend more here and travel North less, then they need to address the price of food and groceries. The idea that reducing excise on alcohol is the magic bullet to stop the flow of cross border shopping is misguided.

Not there yet...but getting there??

2009-12-03T18:40:00.004Z

Today December 3rd the EU Rail Passenger Rights Regulations comes into force....well sort of. The new regulations give rail passengers new rights similar to those which apply for air travel. Train passengers will be entitled to compensation in cases where they are delayed, for example a 25% refund if the delay is between 60 and 119 minutes and a 50% refund if the delay is at least 120 minutes. There are a number of measures which are aimed at assisting people with disabilities and passengers with limited mobility. Also rail operators are required to set up formal complaints mechanisms and each member state is supposed to have a National Enforcement Body to monitor implementation of the regulation.

In theory its great that rail passengers finally have more rights, especially when they are messed around by operators. Indeed the European Commission gets all excited telling us about the brave new world for rail passengers and about how they "will from now on enjoy new rights that will protect them and their belongings when they travel by train anywhere within the European Union". Well not quite. I was aware from briefings by the European Passenger Federation that many member states were seeking derogations (nice word for a get out card!) from the regulations. In particular many member states wanted these regulations to apply solely to international traains and not domestic ones. It seems there was a bun-fight over this in 2007 and the compromise reached between the member states, Commission and Parliament was that it would apply to domestic trains, however member states could seek derogations of up to 15 years for domestic trains. The reality for Irish consumers is that these regulations are of little use if they don't apply to domestic journeys, except when travelling to Belfast or on a cross border train journey on the continent.

New Irish Rail zig-zag route....I am getting dizzy thinking about it :-)

Anyway I contacted the Department of Transport and yes the Irish Government has exempted domestic inter-city trains "pending conclusion of discussions with Irish Rail regarding issues of its implementation on Irish Rail inter-city services." That in effect means as far as I know that the regulations only apply to the Dublin-Belfast line, although I stand to be corrected, perhaps that is exempted as well. The Department did inform me that some of the regulations do apply to all rail services immediately (Articles 9, 11, 12, 19, 20(1) and26) , however apart from making provision for passengers with disabilities all the other regulations coming into force are very basic things that Irish Rail are doing anyway and won't make all that much difference.

I will try and get some more clarity on this issue in the coming weeks. It would appear unfair that the Government expects airlines to implement the EU regulations on air passenger rights, but absolves Irish Rail from their responsibilities to rail passengers. Hopefully these exemptions are short term and we won't have to wait 15 years for these rights...as the old Irish Rail advert goes...."We are not there yet....but we are getting there"...well I hope so.

Its Christmas, so its time for carols, holly, mince pies and vouchers

2009-12-02T19:14:00.000Z

As Christmas approaches the annual present hunt begins. For many of us the prospect of traipsing around shops through the scrum of bargain hunters trying to find the perfect present for loved ones is a version of hell. That is why the gift voucher is a source of salvation.

However as consumer groups and advocates point out every year, vouchers can come with hidden strings attached which can leave a sour taste in the mouth of the recipient. The most common problem is the expiry date, some of the vouchers expire within 6 to 12 months. Under existing laws, the retailer has the power to decide the expiry date and in theory could make it one week! The other problem of course is that with so many businesses failing, will the shop or retailer be around when the recipient wants to spend the voucher in a few months?

So while they can solve lots of dilemmas, I would encourage people check the details of the voucher before they buy it, especially the expiry date.

There may be some vouchers which you will never redeem...I get dizzy on a ladder so no skydive vouchers for me....please!

Interesting to see that Senator Brendan Ryan of the Labour Party is bringing forward legislation to change the law which would mean all vouchers would have a lifespan of 5 years. It won't pass, but at least it might encourage the Government to do something in time for next year....maybe not, but we live in hope!

Hair today, gone tomorrow!

2009-12-01T19:59:00.000Z

As someone who is follicly challenged, I was interested to see the Advertising Standards Authority in the UK ruled against an advert by Advanced Hair Studio which claimed that their laser therapy had been approved and could reduce or stop hair loss and/or grow new hair. I have been combing the web and it seems that while this laser treatment has been "cleared" by the Food and Drugs Administration in the US, it has not been approved. Advanced Hair Studio appear to be scratching their heads at the decision.

I don't know the ins and outs of this, but I do remember a really long (must have been 3-4 minutes) ad for them on TV3 a few months ago. They had a list of sports stars lined up to endorse the product and it seems life would come to an end when your full head of hair disappears!

The bald facts?

The serious angle to this is that it is important that consumers are not sold false promises on these types of products. I am not saying that these AHS treatments don't work, I don't know if they do or not. What I do know is that it is vital that claims being made in advertising such as this can be substantiated. Unfortunately in Ireland, like the UK advertising is self regulated, so unless someone complains the advert won't be reviewed or looked at. And even if judged to be misleading it will be withdrawn many months later, when consumers may well have bought the product or service. And since there are no penalties, it can be worth the risk to run an advert that sails close to the wind. In Ireland we need legislation and an independent body to protect consumers from misleading advertising.

A tale of two taxis

2009-11-30T10:00:00.000Z

Taxi drivers as a profession are not the most popular. They are probably up there with politicians, bankers and tax collectors. However I have come across quite a few decent taxi drivers in my time. However I have also come across obnoxious, ignorant taxi drivers who expect consumers to put up with dirty, smelly taxis, who expect you to direct them to your destination and who never carry any change. And don't start me with printed receipts...."oh the machine is broken"....and "do you have a pen I will write one out for you" As a native, I generally don't have to worry about being taken on the scenic route, but when abroad there are times when you know you are being taken for a ride in more ways than one!

Some in the taxi business will say the problems here are a result of the liberalisation of the trade, and the fact that part timers and unsuitable people have started to drive taxis. However as someone who remembers the bad old day when taxis were like hens teeth, we can never go back to the way things were. I remember waiting at a taxi rank in Dublin for about 3 hours one dark and cold November night in 1999. Quantity and quality should not be mutually exclusive.

Anyhow in recent weeks I have experienced both ends of the spectrum. I encountered a taxi driver who was polite, who didn't need directions, who took me via the shortest route, who had change and who printed off a receipt. And he didn't insist on talking ad nausem and telling me his opinions on what was wrong with the world!

Then 2 weeks ago on the way home from the airport, I encountered another kind of taxi driver. Car was clean and he didn't need directions to Ashbourne. Great I thought, its almost midnight and I can sit back and relax after a long flight. However when we left the first roundabout out of the airport, I noticed that he was taking the motorway and I asked him why he wasn't taking normal way to Ashbourne via the old airport road and Kilshane Cross. He tried to brush it off and I assumed he was taking another shortcut further up the road. However further into the journey I realised he was taking me the long way home to Ashbourne. I questioned him again and then he became angry and told me if I didn't like the way he was going he would drop me back at the airport. He also told me amazingly that the other road which is used by tens of thousands of vehicles everyday and which I almost everyone else from Ashbourne and beyond uses to get to the airport was dangerous.

Thankfully my experience didn't come to this!

I was annoyed but didn't see the point in having a blazing row. To be honest was also concerned that he just might stop and leave me stranded on the M50. So I politely told him I was unhappy and would be reporting my complaint to the taxi regulator. The rest of the journey home was not too pleasant and a very silent one. On arrival home I got my receipt and paid up.

Sometimes we get mad and do nothing. I have had bad experiences with taxis before, but haven't complained. Life is too short. But this was too much for me. I have since made my complaint to the Commission for Taxi Regulation and have got a acknowledgement. While their complaint form is online, you cannot submit the complaint online, instead you have to type it up and post it off. Hopefully they will move to an online system to make it easier for consumers to complain in the future.

As far as I am concerned, the driver added about 4km to my journey and probably about €4-€5 to the fare. However more concerning for me was his aggressive behaviour, which was totally unacceptable and unnerving. I look forward to hearing from the regulator in due course and will keep you posted!

Not the mighty Quinn!

2009-11-29T17:39:00.002Z

Despite all the spin from the Irish Government, the appointment of Maire Geoghegan Quinn as Research and Innovation Commissioner is a third tier appointment far removed from the plum post we got with McCreevy as Internal Market Commissioner in 2004. The disappointing appointment is probably a reflection of the fact that McCreevy has not done well in Brussels and that Ms Geoghegan Quinn despite being a formidable Minister in the 1980s and 1990s has not been a front line politician for over 13 years.

The new Commission is a reflection also of the changed environment. The appointments of Barnier, Almunia, Oettinger and Rehn as Internal Market, Competition, Energy and Economic and Monetary Affairs Commissioners respectively is a repudiation of Le Monde Anglo-Saxon and the free market approach that dominated the first Barroso Commission epitomised by Champagne Charlie. It is good to see that consumer rights are more pronounced in the statements from Barroso prior to his re-appointment in September 2009.

What does the EU do for consumers anyway?

From a consumer prospective, we have a new Commissioner Mr John Dalli from Malta. In the last Commission the Health and Consumers portfolios were divided from 2007 when Bulgaria and Romania joined, however he takes up the post with the two parts of the job reunited. He has a hard act to follow coming after Ms Kuneva who was very active on consumer issues during her mandate. I know quite a few people from Malta and they were all very pleasant, friendly and practical people. And of course like Ireland, Malta was part of the British Empire, so their political and legal system has many similarities with Ireland and the UK. In relation to the draft Consumer Rights Directive he may be more amenable than Kuneva who appeared determined to bring in changes that would not always be good for consumers.

Apart from the appointment of Commissioners and their portfolios, Barroso made a number of changes to the portfolios. For example BEUC have been calling for a number of years for the units in the EU Commission dealing with pharmaceutical products and cosmetics to be moved from the Enterprise and Industry Directorate to the Health and Consumer Directorate. The good news is that Barroso has finally agreed to do this.

I wish Commissioner Dalli well in the new role.

Upsetting the apple tart!

2009-10-22T01:36:00.004+01:00

I was listening to our former leader Bertie Ahern on the radio last week plugging his new autobiography. Bertie was always a great man for what the experts call a malatropism, in laypersons terms getting his words and meanings mangled. One of the famous lines a few years ago was his exhortation to us that we shouldn't "upset the apple tart". Although some of us thought there was method in his malatropism!

Anyhow in the course of his interview with Pat Kenny he was asked about mistakes he made during this tenure. He was slow to admit any, except....and I drew my breath, at last some real insights....but no his only real mistake was the establishment of the Financial Regulator. He said that if he had the choice again he would never have removed the regulation of the banks from the Central Bank and that basically the Financial Regulator was too focused on "the consumer" because of all the overcharging scandals and ignored its prudential superivsion role. Now that comment I must say really did upset my applet tart for the rest of the day!

This was a line being spun by the Irish Bankers Federation during the summer as well, that the Financial Regulator was too busy on consumer issues and producing the "I don't know what a tracker mortgage is " adverts to notice that the banks were heading for the abyss. Now that is such a load of baloney. Of course that is a convenient because it allows the Government, the banks, the developers and sections of the media off the hook.

Now that is what I call a bank digout!

The demise of the Irish banking system resulted from a combination of factors, such as a very strong pro-construction policy by Government with tax reliefs for developers and investors, the insistence by the banks, stockbrokers, etc for "light touch" regulation which meant that the financial regulator got lots of meaningless data, but not any really useful information, the dependence of the banks on inter-bank funds, low interest rates and a flood of cheap credit money being shovelled out to consumers. On top of that you had a phalanx of economists and commentators in the banks and stockbroking firms and egged on by some politicians and sections of the media who added fuel to an already overheated market by telling us all to buy before it was too late and lashing out at anyone who questioned what was going on.

And given all that it is amazing, yet not surprising that some would try and say the edifice came crashing down because Pat Neary and co were too busy writing a consumer protection code and making adverts. While I welcomed the increase focus on consumer issues in the early years, progress has been very slow. No one could argue that Ireland is some sort of utopia for financial consumers! Ask anyone who is in debt, ask anyone who got bad advice, ask anyone who got ripped off, ask people who is struggling to find the next instalment of their loan or mortgage payment.

Yes mistakes were made in the establishment of the Financial Regulator, primarily the failure to put in strong people who would stand up to Government and the vested interests and their insistence on "light touch" regulation which hampered the ability of the institution to have any idea what was going on! And even when they did they appeared very slow to use the powers they did have.

Churchill once said "Those that fail to learn from history are doomed to repeat it." Therefore if we don't conduct a proper enquiry into how the banking crisis occured then we could be back in the same place within a generation. The Public Accounts Committee indicated that they would discuss the establishment of such an enquiry in September, but I am not sure what has happened to that. It may have been delayed by NAMA, but it does need to happen.

However as Bertie would say lets not be throwing red herrings and white elephants into the mix by blaming the banking crisis on the consumer. They are central players alright but only as the people who will pay for the sins of others.

It takes time to do things now!

2009-07-23T18:39:00.002+01:00

The Tánaiste Mary Coughlan was right to call for greater competition and for action to tackle the high costs and prices charged in the services and non-traded sector by doctors, dentists, lawyers, etc at the MacGill Summer School. Essentially she was challenging the professionals and their representative bodies to put their shoulder to the wheel in terms of increasing competitiveness. Now many of them would say they have suffered a lot from the downturn, in particular professionals such as architects, solicitors and estate agents where job losses and business closures have been high. But we also know many of them did very well in the last 15 years too.

Over the last decade the Competition Authority have produced a range of reports entitled "market studies" looking at certain professions and making a number of recommendations. These were quite lengthy and detailed reports, costly no doubt that exposed anti-competitive and restrictive practices in the professions which increased costs for consumers. In areas such as the legal, medical and dental professions, entry to training was controlled by the representative bodies keeping numbers down and increasing costs. The reports recommended a range of actions directed to the representative bodies, Government and statutory bodies.

In 2007 the Competition Authority as part of a submission to Government did an analysis of progress on their reports and they found little progress was made on most of the recommendations. (The table is on pages 57-58 of this report) Indeed in fairness to most of the representative bodies, they had a least moved on some of the recommendations. In fact it was Government Departments who had the worst record and had largely failed to move on most of the proposals. Perhaps some of the Departments disagree with the proposals, however we don't know.

Classic..."It takes time to do things now"!

Therefore while I agree with the diagnosis of the Tánaiste I disagree with her on the cure. We do not need another report in 6 months time, that is perhaps what the civil service would like. Consumers and taxpayers need action now to reduce costs and charges and that can be achieved now by Government moving to implement many of the recommendations in these reports.

Mr. Doorley goes to Washington

2009-07-06T16:36:00.004+01:00

Yes its been a while since I posted. May and early June were mad busy and then I was away on holidays after that, so only now getting into the swing of things again. In mid June I had the pleasure of visiting Washington D.C. (had a short sojourn in NYC). I have grown up on US politics and American civil war history so lots to see and do. The Lincoln memorial and Capitol Hill were particular treats.

In advance of my trip I decided to email the Consumer Federation of America, (CFA) just to see if they would be willing to spare me an hour to discuss consumer issues in the US. Many thanks to Mark Silbergeld, Director of International Issues at the CFA for not only sparing 3 hours to share information on consumer issues, but for inviting me to the 39th Annual Awards of the CFA. It was a very impressive, well attended and enjoyable evening.

Interestingly while I was there one of the major announcements from Obama was the establishment of a new Consumer Financial Protection Agency (CFPA). Of course unlike here where the executive controls the legislature and most Government proposals are implemented in full, Obama will have to negotiate with Congress to get this through. Predictably industry groups in the US blasted the plan. However it was good to see senior politicians over there such as Senator Chris Todd taking a strong consumer position. We could do with more politicians here taking such a strong line to promote and enhance consumer protection.

Senator Dodd tells it as it is....where are the Irish Senator Dodds?

While Obama was setting out his stall in the US, the Irish Government was revealing how it planned to reform the regulation of our financial services sector. Well in truth, it wasn't all that revealing in that it only filled in some of the blanks left over from Cowen's Ard Fheis speech and the April Budget announcement. I welcome the fact that the original suggestion that the consumer information and education role would be merged with the Financial Ombudsman has been ditched and that these functions will be transferred to the NCA. There was a danger that the good work and integrity of the Financial Ombudsman would be undermined by these structural changes. If there was a hint that the Ombudsman was engaged in advocacy, the office could be accused of bias and all decisions could be challenged and overturned. The transfer of these functions to the NCA seems like a good fit and to be cost effective, but the FR had a good track record in the area of information and price surveys, so the NCA needs to maintain that work.

The core issues remain unresolved. Where will consumer protection reside? Who will be responsible for implementation and monitoring of the consumer protection code? Who will conduct the consumer related inspections? Who will take the enforcement proceedings?

There is a danger that we focus solely on institutional reform or on the issue of a rules vs a principle based appraoch. I believe what we really need is cultural change. Essentially we need effective enforcement. We need a regulator who is willing to take on the big players and vested interests and who isn't afraid to institute and pursue legal action.

I have heard a lot of claptrap in recent months on this issue, the most baseless, yet dangerous was the assertion that the Financial Regulator failed because " it was preoccupied with it's consumer mandate". Of course it suits some interests to spin this because the logical conclusion of that argument is to downgrade the consumer protection mandate in the new structure. That would be totally unacceptable and I don't think Government would be that foolish.

My biggest problem with proceeedings has been the lack of a plan or a strategy and the failure by the Department of Finance to engage in consultation on the new regulatory regime. I appreciate that the Minister and the senior department officials are dealing with a myriad of other urgent and serious issues, but we cannot afford to mess this up again. We need more than press releases and speeches, the very least we need is a White Paper setting out the options. Perhaps there is one in the bowels of Merrion Street. However from where I am it appears very disjointed and ad hoc. Let's hope I am mistaken.

Sterling efforts are paying off!!

2009-04-25T12:13:00.004+01:00

Ever since sterling started to weaken in early 2008, there have been lots of stories about the huge differences in the price of groceries, clothes, electronic goods etc between here and the UK, but especially Northern Ireland. Initially we were told by retailers that it would take 3-6 months before the currency fluctuations would reach the shop floor. Of course that didn't happen!

The laws of the market dictate that retailers will charge what they think the buyer will pay. Perhaps during the boom people were willing to flash the cash, of course that has changed now for many people. In particular what really cheeses off people is the fact that products had a sterling price displayed which when compared to the equivalent in euros was much cheaper.

The constant commentary and criticism won't go away and more importantly the flood of consumers across the border will cost retailers in the long run, both in terms of business and reputation. Tesco admitted as much this week. And the state coffers are suffering too, the Revenue Commissioners estimate it could be costing up to €700m. It has taken a while but I think retailers are beginning to respond, they have too. Tesco started the ball rolling last month, but we have a long way to go.

Fresh beef for sale in Ballinrobe...a very moooving story!

The focus has also shifted to other products and services, and in recent weeks I was contacted by a few people about the major difference between the sterling and euro prices of the same accommodation, at the resorts on keycamp.ie and keycamp.co.uk in France. When I checked earlier this week there was a significant difference in the prices available on the two sites. Aideen Sheehan did an excellent piece on it in the Independent during the week, hopefully the exposure of the price differential will lead to a review of the Irish prices! I also think that the continued attention on what is referred to as "the Paddy Tax" will force retailers and businesses throughout the economy to focus on delivering more value and drive down prices further.

Valueireland.....get your facts right!

2009-04-17T13:26:00.006+01:00

The emergence of a number of consumer advocates and related websites and blogs has been great in recent years. The more information that people can access the better in my view and as a consumer advocate myself I am all in favour of competition. With their websites and blogs people like Brendan Burgess and Damien Mulley are providing a great service to consumers on financial and technology/communications issues respectively. Likewise Conor Pope (Irish Times) and Tina Leonard (Smart Consumer-Irish Indo and RTE) have emerged as really good contributors on issues affecting Irish consumers by putting information in the public domain. And Charlie Weston's War on the banks has done more for mortgage holders than the rest put together. And of course there are excellent websites such as Thrifty pages and Cheapeats which provide practical information to assist people to save money and get a better deal in these less affluent times. Into that mix I would have to add valueireland.com which was set up by Diarmuid McShane, which does provide information and advice as well as indulging in some "commentary".

Now anyone reading Diarmuid's blog would know that he is not a fan of the Consumers' Association which I chair. In fact he goes out of his way to criticise or to find fault with almost everything that the CAI does. He used to be a member of our Council, but lets say we had our differences and to make a long story boring he resigned. He has given his side of the story to the reasons why, in fact ad nauseum on his blog, but there are two sides to every story. I could give my views, however to be frank I think 99% of you would be saying cop yourself on and write about something that is of interest to me and consumers in general, and you would be right!

Its a free country so if he wants to lash CAI everyday, then so be it, nothing worse than being talked about than not being talked about as they say. Indeed some people have asked me what is his strange obsession with CAI, only he can answer that. I just think its a waste of time and energy to be so negative when he could be using the space to be of better use to consumers. There have been times when I have disagreed or found fault with aspects of what other consumer advocates have said, but I have refrained because I believe that it does not serve consumer interests for us to be bickering. That only serves the interests of those who want to see consumer rights undermined and diminished. For that reason, I haven't responded to his attacks.

Is Mortgage Interest Relief a bailout....I say...No, No, No.

However Diarmuid's latest salvo against me and CAI is not only incorrect, but would if unchallenged be very bad news for mortgage holders. He claims that I am advocating for a "bail out" for mortgage holders on a fixed rate. He says;

Referring to banks being bailed out and using that as a precedence for bailing out home owners, as advocated by Mr. Doorley, is an extremely dangerous suggestion and hints that we proceed down the road of two wrongs making a right when it comes to the dire financial affairs that we’re in at the moment.

Of course I never said that. This is the article where I was quoted. The context was the decision by Government in the Budget to abolish mortgage interest relief on mortgages of 7 years or more. This will have a major impact on the over 250,000 people who took out fixed rate mortgages between 1997 and 2002 for example. While some may have switched to a variable rate, many wouldn't have.

Fact number 1.
The Government stated that the reason for the abolition of Mortgage Interest Relief (MIR) for these mortgage holders was that interest rates and repayments had come down in the last 6 months. Yes that's true for people on tracker and some variable interest rates, but not true for people on fixed rate mortgages, they are paying the same as they were in October 2008!

Fact number 2
I stand over my view that by abolishing MIR for fixed rate mortgage holders that the Government are abandoning people lumbered with large repayments. MIR has been a long standing support which Governments gave to assist people who buy houses to live in! The vast majority of the people on fixed mortgages who have been in contact with me, don't expect that they can switch to a variable rate at will and with no cost. They know they are in a contract with upsides and downsides. However they rightly don't understand how a Government can find €7bn to re-capitalise banks, while cutting supports which cost less than 2% of that or €128m to homeowners who didn't cause this mess.

Fact number 3
I have never stated or even "hinted" that people in fixed rate mortgages should be "bailed out" as Mr. McShane refers to it and be able to switch to a variable rate at no cost. I do think there are huge question marks over the penalty fees being requested and being charged by banks for people who switch and I would like to see independent oversight of that.

Fact number 4
I have questioned the actions of some banks and will continue to do so who have been very slow to pass on ECB rate cuts to people on variable rate mortgages. I don't think that the financial services fraternity have quite understood that the rules of the game have changed. The taxpayer and consumer have bailed them out for their reckless and feckless behaviour, so when the ECB cuts interest rates to assist consumers and business and stimulate the economy, the idea that they can gobble up the benefit must be challenged.

The assertion that MIR is akin to a bailout is also dangerous, because the Government is considering its future and has asked the Commission on Taxation to examine it. We all know that the first few years of a mortgage are the hardest and many people on all types of mortgages have factored in the MIR. Over 235,000 people took out fixed rate mortgages between 2003 and the end of the third quarter last year. If the Government did abolish MIR for first time buyers, then many would be in severe difficulty. That must be prevented at all costs. That is why suggestions or assertions that MIR is some kind of bailout would be manna from heaven for those who would like to see it abolished.

So hopefully Mr. McShane will set the record straight.... and perhaps tell us where he stands on mortgage interest relief as well, which is the really important issue here which we all should be working together on to retain.

Going Dutch?

2009-04-15T16:05:00.008+01:00

Here we go again. Despite talk of strong regulation and effective enforcement, last week saw the same old softly softly approach to regulation that got us into the current sorry mess. Davy Stockbrokers were found to have breached rules governing the sale of perpetual bonds to credit unions. The Irish Stock Exchange issued a carefully worded statement, which confirmed that Davys had breached stock market rules, but there was no mention of resignations or fines. This deal has been a disaster for the credit unions, it is estimated that they have lost about 100m euro. Davys have only offered 35m in compensation, so ultimately it will be the credit unions members who will suffer with higher loan repayments charges and reduced or no dividends on their shares to meet the massive losses.

These are the same Davys stockbrokers who in league with two other stockbroking firms called for a cut to social welfare. I would say that senior figures in Government must have been fuming because whatever hope there was of a rate cut before the stockbrokers intervened, there was no hope after this, as the credibility of these people is so low. They have projected deflation of 3% this year, so they say social welfare should be cut by 3%. I wouldn't put too much faith into their projections since they have been wrong so many times. I think Fintan O'Toole summed it up perfectly.

Beware the sweet talking Stockbrokers!!!

There has been a lot of talk about the need for radical reform of financial services regulation. A lot of the focus has been on the model. We have heard of the Canadian model of regulation and now the Dutch model is being mentioned. Yes we can learn from other countries, but focusing on models completely misses the main point. The key problem in Ireland was not the model of regulation, but the culture. The financial regulator was not willing to take strong decisive action against reckless and feckless behaviour by banks and bankers. They issued warnings about 100% mortgages, but did nothing to stop them being issued. They also had powers which it would appear they were reluctant to use. The light touch approach was more like the soft touch approach.

I met an official from the Australian regulator a few years ago. He told me how in Australia the regulator there regularly takes CEOs and senior officials to court for breaking the law and rules. When I spoke with him in 2006, they had jailed 17 people in the Financial Services sector. In doing so they sent a very strong message that they wouldn't tolerate any behaviour which puts consumer, the economy and their overall reputation at risk.

The Government does appear to be serious about a radical reform of financial services legislation. I am just concerned that they rushing into changes for the sake of change that may create more problems that they will solve. For example, I am worried about the proposal to separate the consumer protection function out from the new Central Banking Commission. They plan to create a Financial Services Consumer Agency by merging the existing consumer directorate of the Financial Regulator and the Office of the Financial Services Ombudsman. In my view prudential supervision and consumer protection are intertwined and having two agencies will just confuse the consumer and industry.

Apart from the structure, we need to recruit people of international standing with no connections with the industry here, who will take no prisoners and can withstand the financial lobby and act in the public and consumers interest. And while the focus has rightly been on the banks, I think it is also high time we had a shakeup of how the stockbroking companies are regulated.

Weston on target again!

2009-03-17T18:26:00.005Z

Last autumn Charlie Weston in the Irish Indo doggedly pursued and exposed the banks for their failure to pass on the ECB rate cuts to hard pressed consumers. Eventually Charlie managed to shame most of the banks into treating their customers in a fair manner, which was the least we could expect given the bank guarantee scheme, otherwise known as the "no banker left behind" scheme.

Well Charlie is at it again, by highlighting the shameful failure of the banks to pass on the savings from the 5 cuts in the ECB rate to consumers on credit cards, personal loans and overdrafts. Financial institutions are also increasing charges and fees and on top of that they are reducing the rate paid to savers.

Irish banks as responsive as Carol to needs of consumers!

Basically the banks are making ordinary consumers pay for the sins of the golden circle and their feckless and reckless lending practices. This needs to be exposed and the Government needs to call in the bankers and tell them this is not acceptable. The impending regulatory reform of the financial services sector should serve as an opportunity to recast the banking system here so that we have banks that serve the needs of consumers, business and long term sustainable growth and not a small elite and short term profiteering.

Fair play to Charlie for exposing this rip-off. We need to keep a focus on this to shame the banks into treating consumers fairly.

The weight of opinion is growing for a ban on junk food advertising

2009-03-17T11:07:00.006Z

Happy St. Patrick's Day as I write here in Scotland, where it is just another day at the office, where I am over for a 2 day meeting. So while most of the population was gearing up for St.Patrick's day, not too many were aware that last Sunday March 15th was World Consumer Rights Day. No great surprise I suppose, but it does give consumer advocates an opportunity to raise issues of importance nationally and globally.

Campaign video from our Italian counterparts

Consumers International co-ordinated the theme and events for the day. For the second year in a row they decided to focus on the campaign to restrict junk food advertising to children and young people, which is leading to such a huge health and social problem all over the world. This is part of their ongoing excellent "Junk Food Generation" campaign.

We have a major problem in Ireland, it is estimated that over 330,000 children are obese. The Government set up a Taskforce on Obesity which reported in 2005. It set out a course of action, however like many strategies published in recent years it largely lies gathering dust.

We once again took the opportunity again this year to link up with the Children's Rights Alliance Their CEO Jillian Van Turnhout is not only an excellent advocate for children, but also a good friend of many years. Last March we called for action to be taken to protect children from aggressive and pervasive junk food advertising, in the form of a ban of adverts before 9pm.

We were delighted that the Minister for Communications, Energy and Natural Resources, Eamon Ryan included section 42 of the Broadcasting Bill 2008 to restrict the advertising of foods which are high in salt, sugar and fat to children. The Bill is making its way through the Oireachtas and should be passed by the summer, however in our view it is vital that once it is passed that the new proposed Broadcasting Authority moves quickly to regulate junk food advertising.

As expected there has been an outcry from sections of the junk food and advertising industries to date. No doubt they will propose industry developed and managed "voluntary" codes which won't be worth the paper they are written on and even if breached there will be no meaningful penalties. However the reality is that the Goverment has to put the current and future health and well being of thousands of children before commercial interests. I think a long battle lies ahead, but one worth fighting!

Sharing the pain equally? Fat chance!

2009-02-06T19:09:00.014Z

Blogging had to take a back seat these last few weeks. I represent NYCI at the social partnership talks and the negotiations on a plan to address the perilous state of our public finances were quite intense up until last Tuesday. The rather snappily titled (not) document "Draft Framework for a Pact for Stabilisation, Social Solidarity and Economic Renewal" was concentrating all our minds. The public perception may be that the talks collapsed completely, however while the Government and the Trade Unions failed to agree on the issue of the pensions levy, this document has been agreed and will be important in the coming months and years.

Some of the discussions at the talks were interesting, people expressing anger at how the bankers, builders, stockbrokers etc who got us into this mess were getting away Scot free. There is an expectation at the few dozen people who contributed greatly to the rapid descent in our economy must pay the price. People talked about a criminal assets bureau for the financial sector. One story was recounted about how Sean Fitzpatrick was asked to leave a pub, because the owner didn't want his sort around the place. I am not surprised, people are losing their jobs, their homes, dreams and sanity and these guys get millions in payoffs and can retire to the golf course. Indeed it was galling to read Rossa White over in the very smug Davy's stockbrokers lecturing us on how to deal with the crisis, when he and his kind have talked up the housing market and contributed so much to our current problems. And as for their analysis, they can keep it, they have been so wrong so often, they have the credibility of used car salesmen. As recently as March 2006, the so called "analysts" were telling us the boom would last for another 15 years.

Exclusive recording of the Cabinet meeting!

I see the Times in London came up with a list of the 10 people most responsible for the credit crunch. Would be interesting to do a similar exercise here on the ten people responsible for the near collapse of the banking system. Sean Fitzpatrick and Pat Neary may be obvious choices, but they are not solely to blame, there are many people still holding powerful positions in this state who have a lot to answer for as well.

There was an interesting story in the Sunday Tribune last week that didn't get much coverage. It dealt with contracts for difference (CFD) and how they played such a crucial role in the collapse of Anglo Irish and the reputational damage to our financial service sector here. It is alleged that through CFDs Sean Quinn and his family built up a huge stake, almost 25% in Anglo Irish Bank, unknown to many investors. Slowly though international investors got wind of what was happening and confidence in the bank and shares began to collapse. As the article states here, both the Financial Regulator and Irish Stock Exchange come out badly from this fiasco. But will there be any real change so that the lessons learned cannot be repeated?

There is a really interesting section in the article on how a 1% tax could have prevented the problems at Anglo Irish, but how the powerful Dublin stockbrokers scuppered that;

"It could have been different. In March 2006, the Revenue Commissioners, responding to a query about a tax treatment from a Dublin broker issued guidance that tax-free CFDs should be taxed at the 1% that applied to traditional share purchases. All hell broke lose. "It was like a tsunami had hit," recalls a tax expert with close knowledge of what happened at the time. "The brokers kicked up a storm," he said.The storm confirmed the importance of the CFD trades to the profits of the main Dublin stockbrokers, despite the fact that the Irish stock exchange was being dangerously speculated on. Within days, the then finance minister, Brian Cowen, bowed to pressure and pledged to amend the Finance Bill to maintain the tax-free status of CFD trading. The 1% stamp duty levy would continue to be levied only on traditional purchases of shares"

I am sure the files on the correspondence between the main stockbrokers and the Department of Finance would make for interesting reading. But will we see radical change at the Financial Regulator and will the Irish Stock Exchange investigate what went on here to avoid a repeat, which has done so much damage to our financial services sector and has contributed greatly to our economic and public finance woes? I am also concerned at the lack of apparent urgency or sense we need a radical overhaul of the financial services regulatory system. In the Dáil this week the Minister said this in a response to a question on reform;

Financial Services Regulation.
"Deputy Joan Burton asked the Minister for Finance the measures and actions he will take to examine the reasons behind the regulatory failure in the financial services sector here to determine the changes that are required; if he will give a commitment to engage a broad range of stakeholders, such as academics, consumer representatives and social partners; and if he will make a statement on the matter.

Minister for Finance (Deputy Brian Lenihan): Any change to the regulatory framework in Ireland must have regard to EU and international developments. In relation to the EU, there are a number of proposals being developed for adoption this year, including improvements to the Capital Requirements Directive to further strengthen the existing banking prudential framework. Furthermore, the role and mandates of national regulators has been the subject of in-depth consideration by the Ecofin Council. Common reporting standards for financial institutions will enable greater EU wide consistency in supervision. An initial report on this matter is due to be submitted to the Spring European Council and any reform of our Financial Regulator’s structures will be consistent with EU developments. Arising from recent events, there are a number of reviews underway within the Financial Regulator with a view to identifying any shortcomings in the Financial Regulator’s strategic regulatory approach, its structures and its capacity to respond. I await with interest the outcomes of these reviews and will be working with the Regulatory Authority to bring about improvements in our system of financial regulation. Stakeholders will have an involvement in this process through the independent statutory Consultative Panels which will be making an important input to the review process. I will bring proposals to Government if, arising from these reviews, I consider that a change in legislation is required. As the Deputy will also appreciate, under the Credit Institutions (Financial Support) Scheme, the oversight of the banks concerned has already been greatly intensified.

This response is a bit alarming, as if nothing much has happened and some tweaking may be required! For my sins I have been re-appointed to the Financial Regulator's Consumer Consultative Panel. I am proud of the work the last panel did on the Consumer Protection Code, which was an advance for consumers. My view is that the Financial Regulator failed not because it did not have the powers to act, but because it was too timid and unwilling to act against the big players, something which I stated publicly in December 2007. The financial services sector in Dublin was a small cosy club, where the top bankers, stockbrokers, audit firms, government officials and central bank regulators were and those still standing are still very chummy. No one will rock the boat!

I would hope that the Consumer Panel will have some input and influence on reforms, but what we really need is a broader public debate and discussion about the role of banks and the financial services sector. We need the sector to return to basic banking and to serve the needs of the economy and our society and not be the slave of the equity analysts! On top of trying to protect consumers rights in the areas of mortgage repossession and attempts by banks to pass on their mistakes in higher charges and fees, I will be following up on some of the issues raised here and looking in particular at the how we can make the system work for consumers and citizens.

Layaway, the cure for our plastic pain?

2009-01-20T22:05:00.005Z

Yesterday, January 19th was officially the most depressing day of the year, when it seems the bad weather, long forgotten new year resolutions and the post Christmas bills all catch up with us. To be honest the bill I hate most is my credit card bill. January seems so far away when you are shopping before Christmas. Yes I try to reduce the cost of it, but sometimes I need it to tide me over or I have to withdraw cash where these sneaky charges kick in....it always galls me even if I have to pay a few euro in charges and fees. Two years ago I was involved in a NYCI campaign to address some of the worst anti-consumer features of credit cards. Last year I got a commitment from the Financial Regulator that some of these issues would be dealt with in the review of the Financial Regulator's Consumer Protection Code in 2009. Given all that has happened in the financial sector in recent days, months and weeks, a revolution in regulation is required, not a review.

Well back to my bill, I got a shock when it arrived as I was charged a €7.50 over limit fee. How could this be, I don't remember having to pay this before. Anyhow I called my bank Permanent TSB and asked where did this come from. I was informed that this new fee was announced in a press release in October (couldn't find that) and of course if I had read the new terms and conditions line by line, would have seen details on page 6, how silly of me!

Bank charges and fees have been a major issue in the UK. Some of the banks there charge unfair and exorbitant fees and the issue has been through the courts where the banks have been taken to task and many consumers are getting redress. The Office for Fair Trading there has investigated these charges known as default charges and called for reductions. The only reason we have been spared such an onslaught is that many of the fees and charges (not credit card fees it would appear) are governed by Section 149 of the Consumer Credit Act which I wrote about previously Anyhow my bank told me that the fee was to cover their costs because it cost them moeny when I went over the limit, which of course is balderdash.

Firstly I told them a limit is a limit, if I exceed my credit card limit, then the payment should be refused. I am certainly not one to be embarrassed if my credit card is refused. Secondly it doesn't cost the bank anything, in fact they are charging me interest on the larger amount, so in fact they are having their cake and eating it. Getting a nice fee of €7.50 plus interest on the bigger balance. A few years ago banks were actively encouraging people to increase their limits, sending them letters and calling them. This was banned by the regulator, now they have found a new way around this. Charge an over limit fee and madden us all into increasing our limit to avoid it.

Against the background of my rage at this fee and credit cards in general, I came across this interesting article in the Economist on layaway. Its referred to as a lay-by in the UK, Australia and New Zealand. Basically a return to old and perhaps more sensible times when if you wanted to buy a suite of furniture, you paid for it in instalments and only when you had fully paid for it you collected it. As this blogger recounts I do remember something like this from childhood, but until recent times seemed quite quaint. So instead of walking in, flashing the plastic and a buy now pay later mentality, you are forced to budget so that you can afford your weekly or monthly payments. Sounds like hire purchase, but its not. HP is usually used for large purchases like a car, you get possession of the goods straight away and payments are spread over 2-5 years. For people on lower or stretched incomes (which includes a lot of people now) layaway could be perfect for purchases such as clothes, furniture, white goods etc.

Layaway explained!

Basically you decide what you want to buy, pay a deposit and then pay a weekly or monthly instalment, perhaps over 3-6 months. In other jurisdictions there is a service fee and you would have to factor that into the overall cost. In these times when retailers suddenly collapse, consumers may be wary of paying instalments over a number of months without possession of the goods. And what if you can't pay or if you change your mind. These are all things that need to be clarified before you decide to go down this route. Of course you first have to find a retailer who offers this facility. I could only find one. But I imagine in this straightened times that some retailers would do anything to make sales, while many consumers want to better control and manage their costs, so it just might take off. My only advice is that if it is offered, check all the fine print! But certainly an idea for the times.

Northern Exposure is good for the Republic's consumers and economy

2009-01-08T11:14:00.009Z

There has been a lot of bellyaching from business interests and some politicians about consumers heading to Northern Ireland to access cheaper prices and save money. Brian Lenihan pleaded with consumers to shop at home because by shopping in the North the state was losing revenue needed for investment in schools and hospitals. Firstly I will take Brian Lenihan more seriously on taxation when the massive tax loopholes which allow the super rich to pay little or no tax are closed off. In 2006 we learned that "between the 1999 tax year and 2003, a sizeable number of multimillionaires - 184 to be exact - declared incomes of more than €1m a year and paid no income tax at all." That's not to mention the approximately 3,050 tax exiles who live here for less than 182 days and pay no tax at all. Secondly individual and family incomes are under huge pressure from the high inflation, particularly in food costs over the last 2-3 years. On top of that people's incomes are being squeezed and indeed some being decimated as the result of job losses. The Government mantra was "shop around" and therefore any rationale or sane person would avail of the cheaper grocery prices in the North to help makes ends meet.

Of course the retail and business sectors have been trying to suggest that the Northern shopping phenomenon is all a media creation. The reality here is that if consumers went to Newry or Lurgan and didn't get value or found that the prices were not all that different they would just stop going. The fact that there are still travelling in large numbers indicates people are saving money and getting good value. Of course we had all the usual suspects blaming the high labour costs, rental costs, and any other costs they could think of. I heard a guy on Q102 in November justifying the difference in prices based on the back of an envelope exercise where he had compared rent costs in Dublin and Belfast and also labour costs. Somehow he appeared to think that this rip-off could be explained away on the basis of a few phone calls without any detailed or proper analysis of a whole range of underlying costs. Indeed he like none of the these apologists mention the lower corporation tax and the lower social insurance contributions employers pay here. Neither do they mention the strengthening euro which should be translating into cheaper prices.

Well finally some light was shed on this issue when before Christmas when Forfas published a report which clearly demonstrated that the price differential was not justified. They found that at most the price differential should be in the region of 5% not the between 16% to 31% difference found in independent studies of grocery prices. The Forfas report was based on information provided directly from retailers and most importantly showed that the cost of the goods is the key factor affecting resale prices, its states "the cost of buying goods for resale is the single biggest cost incurred by retailers and accounts for three-quarters to four-fifths of their total costs". So at last clear and independent evidence that labour, utility and rental costs cannot be used to explain away the huge price differences, the reality is that retailers were making significant margins and profits. I suppose the market will always charge what it thinks the consumer will pay and perhaps during the boom years enough (not all) people were willing to pay high prices.

However I think a lot of retailers and businesses were slow to respond to the changing economic circumstances that many consumers found themselves in early last year. They were killing off the golden goose they plucked so easily for a decade. And as a result people began to buy less, switch to the discounters and more recently go North.

Falling through the floor-hopefully prices will follow!

Obviously there are short term benefits for consumers in terms of saving money by heading North. However there are medium and long term benefits as well, not only for the consumer, but for our economy and society as a whole. Having such strong competition available cross border will force retailers and businesses here to reduce their prices and offer better value and service. We saw that to a certain extent over Christmas and New Year with the major reductions in some stores. I believe if retailers here are to regain and retain customers and market share they will have to cut prices.

We are always told that one of the greatest benefits of the EU is the single market and indeed the EU Consumer Policy actually promotes cross border competition stating "the potential therefore exists for deeper EU-wide retail markets. Opening up cross-border retail markets is the key to unlocking the potential of the retail internal market. As cross-border shopping develops as a credible alternative to national markets, consumers both have greater choice and national markets are subject to greater competition."

So contrary to what some politicians and retailers say this "Northern exposure" is actually a good thing. Yes we will lose some tax revenue in the short term, but in the long term for our society and economy, it has positive aspects because it will keep and hopefully force prices down and reduce the cost of living for all and make us more competitive.

Financial Reform-Shame to waste a crisis!

2008-12-30T08:08:00.006Z

I have survived the Christmas, thanks to the good weather did not eat or drink as much and watch as much bad TV. The dry and fine weather meant I could get out on the farm down home in Borrisokane and do some long overdue work cutting some ditches and clearing scrub. Like every other sector farmers have been hit by the recession and I am expecting interesting negotiations with those renting my land in the coming weeks on prices for this year. On a positive note I got a letter from Tipperary GAA letting me know I had won €200 in the weekly lotto draw. Would be great now if the Premier followed that up with an All-Ireland in 2009 as well!

The fresh air gave me some time to reflect on 2008 and of course the 2 big stories of the year were the collapse of our banking system and big shift in consumer spending and habits. So in this blog and the next will look at those issues in depth. But as well as looking at the problem I will try and come up with some possible solutions.

We need a radical overhaul of the financial services sector, people talk of regulatory reform but the fundamental issue is that the system is sales and commission driven and shareholder value trumps everything else. Of course it makes sense to incentivise people, but there have to be some limits and safeguards in place. Unlike buying a pint of milk, consumer protection for consumers purchasing a mortgage needs to be strong and effective, because if things go wrong its very serious for the individual. And as we have seen in recent months, if things go wrong on a grand scale, its very serious for all of us. We have seen this at its worst in the US. Sub prime lenders employed people on a commission basis who went out and sold mortgages to people to buy houses they couldn't afford. The salespeople didn't care whether people could afford the mortgages or not, they got paid for selling them. The sub-prime lenders didn't really care either because they repackaged these mortgages and sold them onto respectable financial institutions who are now dealing with these toxic assets and the fallout. It says a lot about the sharp suits in these institutions with their MBAs that they paid good money for such lousy assets.

The only difference here is that the sub-prime market was only getting going when the bubble burst, things could have been a lot worse if the credit crunch started now instead of August 2007. But a lot of other things were going on here, banks were shovelling out money on personal loans, mortgages, credit cards. I know of cases where people got huge bonuses and holidays for selling products that were definitely not in the interests of the customer. The salesperson didn't care, they got the bonus and if there is a problem it's the customers problem. The Financial Ombudsman has done excellent work on exposing some of the worst cases, but I suspect these are just the tip of the iceberg. I accept that customers have responsibility too, but for many people financial products and services are mind boggling and they are quite literally at the mercy of the salesperson.

At another level banks as we have seen shovelled out money to property developers and builders as if they felt they could defy logic and the premise that what goes up must come down. Like sheep the banks cheered on by stockbrokers, economists and other "experts" lent billions. That policy came home to roost for all the banks, especially Anglo Irish which is most exposed and we are all suffering as a result. No one has taken responsibility for this, Sean Fitzpatrick and David Drumm in Anglo did resign, but their resignations were related to concealment of directors loans. I am sure their resignations will be temporary hiccup, they will take comfort from other high fliers such as Kryan McLoughlin who had to resign as a director of Davys a decade ago due to embarrassing personal tax issues, but is now more powerful than ever. Indeed as Deputy Chairman of Davys which is heavily involved in the Aer Lingus takeover bid on behalf of Ryanair and as a director of Ryanair itself, he will be playing a crucial behind the scenes role in 2009. (The Ryanair takeover of Aer Lingus would be a disaster for consumers in my view, this is something I plan to return to in early 2009)

An apology for only $59.95!

So what can be done? Well Barack Obama's new Chief of Staff Rahm Emanuel is on record as saying, "never waste a crisis" That idea that our current difficulties present opportunities to reform the system in a way that was unthinkable a year ago to prevent a repeat of what has happened.

It might have been necessary initially given the urgency of the situation for the Government to engage solely with the banks, but now there is no excuse. If we are to reform the financial services system, the Government needs to engage with all the stakeholders including consumer organisations, rather than just the banks. Secondly all need to accept that "principles based" or light touch regulation has failed (or as I would refer to it soft touch regulation) and we need a rules based system. Thirdly the Government needs to carry out the review of the effectiveness of the financial regulator in its consumer protection role as promised in the report of the Consumer Strategy Group. Fourthly we need to investigate the possibility of a free impartial financial advice for consumers along the lines being discussed in the UK and that's just for starters. This is one of the issues which the Carnegie Commission on Civil Society is looking at as part of our work and we plan to hold an event in London in February to look at reform of the financial services sector for the benefit of all. So after that I may even have more ideas.

The heavy levy!

2008-12-20T12:02:00.006Z

In November the Government announced a new package of measures in the private health insurance market. This was in response to the surprise decision of the Supreme Court in July to quash the existing risk equalisation scheme that was a key part of our private health insurance market. Up to then there were a number of basic principles underpinning the private health insurance system here, such as community rating, risk equalisation, open enrolment and lifetime cover, (explanation of these terms here). Once the risk equalisation scheme was declared illegal, one leg of the stool was gone and the Government had to come up with a solution.

The Government claimed that the abolition of the risk equalisation scheme would lead to a massive increase in premia for older people. Obviously no one would be in favour of that, but I don't really know how that could be the case. Most older people are insured by VHI, they have 99% of the over-80s, and 90% of the over-60s in the market. Also I know the Government was in turmoil following the medical card fiasco, but looked more like a manufactured crisis to me. Yes companies could design schemes that were more attractive to younger people, but they could not refuse to allow an older person to join and as far as I know all schemes have basic entitlements. So rather than coming up with a solution that would have ensured the viability of the market overall and protected the sector from the collapse of one company, the Government in my view has come up with a scheme designed to protect the state company VHI, allow it to maintain its dominant position, stifle competition and most importantly drive up costs for consumers and indeed force some people to give up on private health insurance.

Do you talk "Insurance Jive"?

The Government response was two-fold, the three companies VHI, Quinn Healthcare and Hibernian Health will have to pay a levy of €160 on all adults over 18 and €53 on all on children insured by them. It is being claimed that this levy will fund additional tax relief for the over 50s. Basically the three companies will receive money from the state for the tax relief (as this is given at source) and will have to pay the levy on all their customers. It has been claimed that because VHI has a higher number of older customers it will receive more than it has to pay in the levy, some claim up to €30m, while the other companies will pay more to the state that they will receive in tax relief payments. So in effect this is risk equalisation by the back door.

When she made the announcement the Minister for Health Mary Harney T.D. stated that she hoped the levy would not be passed on to the consumer. Some chance of that, we can see what has happened, VHI and Quinn have increased their premiums by 23% and 16% respectively and Hibernian yesterday also increased their premiums. The end result of all this is that younger people, many with families may have to cancel their policies and are less likely to take it out in the first place, because the prices are going up and they are getting no additional tax relief. This is especially so in the current economic environment. That is not good news because stated Government policy has been to encourage people to take out health insurance as early in life as possible. In 1999 the Government promised to introduce lifetime community rating, the idea that those joining later in life could be charged more and also I believe would have to include provisions for reductions for those who have been members for a long period. Nothing happened, although they are promising to introduce it now again ten years later. At the moment a person joining at 60 will pay the same premium as a person who joined at 30 and has been paying the premium for 30 years. The only difference is that as you get older the period you need to wait to be covered after joining increases from 6 months for those under 55, a year for those 55 to 64 and 2 years for those over 65.

The new scheme will apply retrospectively from January 1st 2009 once the legislation is published and passed in next legislative session. Hibernian Health has launched an "Axe the Levy" campaign and both they and Quinn have stated they are considering their legal options. Its unlikely the Government will change their mind now, although they may accept some adjustments to the promised legislation. They also say this is a temporary 3 year measure to allow time to come up with a comprehensive plan for the sector. Could we be going the route of universal health insurance as promised by Obama in the States?

We definitely need a well thought out plan for the future of the sector in Ireland, that meets our health needs and is competitive and affordable. If a universal plan can do that, I say yes. In the meantime we are stuck with a levy and a plan that appears designed to prop up a state company, where consumers and patients are the main losers.

Look this gift horse (voucher) in the mouth!

2008-12-13T10:20:00.004Z

Its that time of year again, where many of us drag ourselves around the shops to buy those presents for family and friends. I am not one of those organised people, who draft a list in September and has all the gifts bought and wrapped by November. I usually leave things until the last minute, indeed I can remember some years where I only started on Christmas eve, not to be recommended! For people like me, the gift voucher is the great saviour. If I know that a friend likes reading rather than spend half an hour thinking what book they would like and worrying I might buy a book they won't read. I get them a gift voucher which they can use at their leisure, or so you think! Not only can they be a convenient and safe option as a gift, many people also like getting them, including yours truly. A survey in the UK found that over 40% of people would prefer to receive a gift voucher rather than a traditional present.

Earlier this week on behalf of the Consumers’ Association of Ireland (CAI) I was advising consumers on Today with Pat Kenny among others to be careful when buying gift vouchers as presents for family and friends. I was pointing out that there are a number of pitfalls which consumers need to avoid when buying a gift voucher so that they don’t end up giving a present with a lot of strings attached. At the moment each retailer and business is free to determine the terms and conditions of the vouchers they sell.

One of the biggest issues with gift vouchers is the expiry date. Its important that consumers check this, ask the salesperson if the voucher has an expiry date and if so when will the voucher expire? Some businesses impose a short timeframe of only 6-12 months, so if the voucher is presented after that date there is no legal obligation on the issuer to accept it as payment. The Fine Gael spokesperson on Enterprise, Trade and Employment, Leo Varadkar highlighted this back in February, with one example where the voucher expired after 3 months. Ideally there should be a date on the voucher and there should be no time limit. If there is an expiry date, best to buy one where it will last for at least 2 years. In many cases retailers will accept a voucher after that date, but I have come across cases where they do not. The National Consumer Agency have a list of expiry dates from some of the larger businesses and retailers.

Its also important to know that if the retailer or business closes down, the voucher cannot be redeemed, likewise if the shop/business changes ownership there is no guarantee that they will accept vouchers issued by previous owners, so if you are giving a gift voucher for a large sum there is a risk involved. A relative of mine got a voucher for a travel agent for €400, but within a few months they closed down and she had no comeback.

In Prague for the weekend, but seeing more of the bars than the shops!

CAI would like the law changed to enhance consumer protection. In a number of states in the US, such as Illinois, New Hampshire and California there are specific laws on gift vouchers. In particular the law should include provisions that all gift vouchers would have a lifetime of 5 years, a requirement that the issuing date and all terms and conditions must be included on voucher and that no fees or charges can be applied. Also where there is a small balance left on the voucher, e.g. 5% of the value of original sum, the consumer has the right to seek a cash refund. And in case people think I am advocating that consumers hold unto their vouchers for 5 years, I am not. It makes sense to use the voucher as soon as possible as with inflation it loses value over time.

At Debts Door

2008-12-10T17:05:00.007Z

The Minister for Social and Family Affairs answered a number of questions in the Dail on Tuesday in relation to number of people seeking assistance from the Money Advice and Budgeting Service (MABS). Its shows that the number of new clients going to MABS in the 11 months to the end of November has from 12,400 for the whole of last year to 15,600 up to the end of November. These figures show a 25% increase and that doesn't include the Decemeber figures. On top of that the numbers calling the advice line which was established in October 2007 is almost 11,500. MABS is an excellent service and I would encourage people who are under financial pressure to seek their assistance. I have heard stories that there are waiting times at some offices, not sure if this is true. If it is then the Government need to provide more resources to the MABS service, because the reality with increased demand, the pressure will grow on the hard working MABS staff who can only see so many people in a day.

Likewise we hear of the pressures on organisations such as St Vincent De Paul where demand for assistance and financial help have grown massively too. And in recent days the Irish Times have been running stories about areas (such as my own next of the woods in South Meath) where the recession is biting. I am old enough to remember the late 1970's and early 1980's when money was scarce and inflation from memory was in the 15-20% bracket. My father died suddenly in 1978 when I was 7 and since he was a farmer our whole livlihood was wiped away. There were no EU farm subsidies back then, you lived from what you produced from the farm. Apart from the emotional loss for my mother and my 3 siblings and I, financially times were very tough too. The memory of those difficult times have stayed with me and that is why I really believe the Government needs to do more to assist people whose are facing tough times. If we give people a hand up now they will be able to rebuild their lives and start contributing again when they are back on their feet.

In their pre-budget report the UK the Government have reduced VAT from 17.5% to 15%, have announced a package of measures to assist those in financial difficulty with mortgage debt such as a £200m mortgage rescue scheme, 3 month stay on repossession and increased resources for money and debt advice. Here apart from a slew of direct and indirect taxation the only positive step has been to increase mortgage interest relief marginally for first time buyers.

We have had the bail out for the banks, its time for the Government to come up with a strategy to support ordinary consumers who have lost their jobs, livlihood and income because of the recession along the lines of what the UK Government have done.

The Never Buy Insurance Policies!

2008-12-05T18:15:00.010Z

I got a call this week from a sales rep at O2. You see back in July I bought an iPhone, or as one of my friends calls it, the Jesus phone. I am fairly happy with it, the GPS comes in handy when I am lost as I was last weekend...there are a few problems such as texting and I understand from a friend that integrating it with blue tooth in his car is a problem.

Anyhow the sales rep from O2 wanted me to buy insurance to cover my phone in case it was stolen, lost or broken. Basically for €9 a month I could insure my phone if I lost it, or if someone stole it and made loads of calls to Australia. My response was why? Insurance in basically there to cover substantial loss, i.e. if my house burned down, I wouldn't have a home and would still have a big mortgage, so it makes sense to pass the risk to my home insurance company in return for an annual premium. The same applies to motor insurance in that if you cause or are in a serious car collision, the costs could be exorbitant. Indeed motor insurance is unique in that we are required by law to have it if we have a car.

The "Never Pay Policy" sounds good!

But the idea that I should pay €108 a year to insure a phone which I could buy if it was stolen or lost for between €129 to €229 is mad. And even if someone steals my phone and makes calls I would like to think I will know soon enough to be able to cancel it with O2. A few years ago when I bought my mp3 player in Scotland for £50, I couldn't believe it when the assistant almost insisted I take out an insurance policy on it.

These policies are all the rage, because on one hand the providers whether they be telco companies, white goods retailers or airlines make a nice profit on these worthless policies and they also then of course try to fob people off if they have a problem by telling them to make an insurance claim even if they are responsible for dealing with the consumers problem. Thats bad news because the insurance industry is notorious for anti-consumer practices, as someone once put it they will insure you if you fall out a window, but not when you hit the ground.

Consumers should run a mile from these dubious policies, they are expensive and of little value in my humble opinion.

Ad Attack

2008-12-04T18:23:00.005Z

In recent days RTE highlighted a report which found that broadband customers rarely get the maximum connection speeds advertised by internet service providers. The study on broadband available in Dublin, Cork, Galway and Limerick found that on average consumers benefit from just 60% of advertised speeds. Now in the past telco companies covered themselves by stating in their ads that their offers provided speeds of "up to" so many megabytes. However I thought that had all been sorted out since Comreg and Advertising Standards Association of Ireland (ASAI) had agreed a new set of advertising rules for internet providers last March. Individual consumers can check their speeds, this is one company I have used to check the speed of my broadband at home, but I am sure there are more.

Of course the regulatory regime here for the advertising industry is weak. As in other areas we have "self regulation" or what could be called light touch regulation. I would call it soft touch regulation. Obviously advertising has a role to play in informing consumers about new products or services, it can also promote competition by letting consumers know about cheaper prices or better services. And lets be honest some ads are really good and on TV can be better than the programmes.

A Leonard Rossiter Classic!

However advertising can also be deceptive and misleading as outlined above re broadband. In that case consumers are not getting "what is says on the tin" and are being ripped off by being provided with a service which is poorer than what they are paying for. But the current regulatory regime doesn't promote good practise because if a consumer believes that an advert is misleading all they can do is complain to the ASAI and a number of months later they will either uphold or refuse the complaint. By that stage the advert has served its purpose and may no longer be in circulation. Even where the ASAI has found that an advert was in breach of their codes all they can do is direct that the advert not be run again and/or make recommendations for future ad campaigns. They have no power to impose fines or penalties on those found in breach of their advertising standards even though the misleading advert could have generated considerable revenue for the company. See here for a list of the most recent cases.

As I discussed in this blog last March there is also considerable global pressure for greater regulation of junk food advertising towards children, which many believe is contributing to child obesity. CAI linked up with the Childrens' Rights Alliance to call for greater restrictions on junk food advertising here and it is positive that Minister Eamon Ryan has included a provision for this in the Broadcasting Bill which is going through the Oireachtas now. Likewise there is growing pressure to restrict alcohol advertising which appears to be targeting young people, but so far the Government have caved into the drinks lobby and only introduced "voluntary codes" which are unenforceable, weak and ineffective.

What we need to protect consumers is an advertising code underpinned by law, policed by a powerful regulator where ads can be stopped or taken down immediately and where financial penalties can be applied to act as a disincentive.

Buffetted in times of recession

2008-11-22T07:48:00.002Z

I like many Irish people purchased shares in Telecom Eireann having fallen for all the hype and marketing about how wonderful an opportunity it was. It was my first foray into the world of stocks and shares and apart from those who sold their shares in the first few days we suffered big losses.

In recent times people have suggested that shares are now great value and the "sage of Omaha" Warren Buffett tells us (see video below) "Be greedy when others are fearful and be fearful when others are greedy" But can we trust the stockbrokers not to sell us duds as many have tried over the last decade.

The Sage of Omaha!

As Dave points out on his blog here at 6:30 on a Wednesday some "expert" over at Davys is ramping up Bank of Ireland shares and then at 8:20 the next morning they are revising down their price target and as he says some explanation and disclosure as to the drastic change would be helpful. Of course if an ordinary consumer bought €20,000 of shares based on this advice at the time, they would be sitting on shares worth now about €1500. But no fear Davys would still have their hefty fees.

Of course Shane Ross is the man the stockbrokers hate, because he was a stockbroker and he knows that the so called "experts" in stockbroking firms are just making it up as they go along. As he points out they have been wrong so many times and they are still listened to. His article is a fairly damning indictment of the situation and that was January 2008 and since then share prices have fallen much much further. He also makes a good point about a conflict of interest where a stockbroker personally or his/her company could well be the broker for the firm they are encouraging others to invest in. Is this always declared to the client? Its a serious issue when people's life savings can be lost or massively reduced by these recommendations.

This is an area which does require greater regulation, but will the stockbrokers who are powerful vested interests really want our politicians upsetting their applecart? Indeed there have been some minor changes and the Financial Regulator has now some oversight of the work and procedures of the Irish Stock Exchange, but I don't think it is enough a lot more needs to be done. Of course our stockbroking firms have always been very supportive of the democratic process and in return some politicians appear to have been very forgiving when of "errors" that have occured, so I wouldn't "bank on it" and the prospect of any serious and meaningful regulation of this area any time soon.

But that doesn't mean that we shouldn't try and this is an area I will be returning to in the coming months. And of course apart from the big regulation issues there are the individual cases where people find they are being charged hefty fees for a bad service, and unlike the price of a pint of milk, huge sums of money are involved.

Protective or Defective Directive?

2008-11-21T17:47:00.009Z

I was out judging a schools public speaking competition last night for the National Forum on Europe, thankfully the subject was not Lisbon! All the speakers were really impressive, I remember the first time I spoke in public, the room spun around and I got my cards mixed up so I repeated about half the speech. Public speaking competitions are a good starter, but debating is much better for helping you frame an argument, think on your feet and of course the odd bit of heckling. Had some fun times in debating competitions in Tipperary, including one famous occasion where one of our team (now an esteemed member of the legal profession) managed to convince our opponents he was an adjudicator and asked them for their main arguments prior to the contest, you can imagine their surprise when he took his place on our team!

While we are still dealing with the fall out from the Lisbon Treaty defeat here in Ireland, the EU machinery in Brussels works away on a daily basis churning out reports, recommendations, opinions and directives. Many of these impact on our daily lives, but in most cases what is decided today may not affect us for many years. The EU "Community Method" is complex and slow, but it does work, having experienced it myself during my time with the EYF.

My friend Dominic encouraged me to join him in Croker on Wednesday night, it was more like Krakow or Warsaw than Dublin-the Polish fans far outnumbered the Irish and were great fun and in great voice....a nice side of EU integration even if Ireland lost 3-2

I was over in Brussels last week and got a briefing on the proposal by Commissioner Kuneva for a new consumer directive. As you can see here the Commission is saying that this directive is a great step forward. BEUC (European Consumers' Organisation) on the other hand is not so happy, raising concerns about a number of issues.

From my experience the big shift here is the move from minimum harmonisation to maximum harmonisation. This means that if passed that EU law in the areas covered by the directive will be the same in all member states. The benefits of course are that the law is consistent across the EU and where legal provisions are weak, consumers will be better protected. However where the law is stronger, maximum harmonisation could undermine hard won gains by consumers over many years. Do we really want to forgo rights just to enhance cross border trade?

Its unlikely that the directive will be passed before the European elections next June and the installation of a new Commission in the autumn of 2009, so the current proposal could fall. In any event it is a proposal to monitor because it could have a big impact on us all in the year ahead.

Not a perfect storm!

2008-11-20T10:56:00.005Z

Vodafone will soon be launching their Blackberry Storm in Ireland. However it seems they will be charging Irish consumers a lot more for the phone and the tariffs than in the UK and on the continent. Thanks to http://www.keith.gs/2008/11/vodafone-blackberry-storm-yet-another-paddy-tax/ for spotting this and the detailed analysis.

I am sure they will try and justify it on the basis of that costs are higher here, but of course all these companies forget to mention our very favourable corporate tax rate. Termination rates may be more expensive here, but definitely not six times more expensive. The data doesn't cost a cent more and we already know that the mobile companies here generate the second highest ARPU (average revenue per user) in Europe at €40.87 compared to an EU average of €25.99.

So as Keith says its another paddy tax on the Irish consumer. Obviosuly Vodafone believe that consumers here will pay more, only time will tell. The best way of course for consumers to apply pressure on Vodafone to reduce the price is to hold off on buying the product.

Cutting down on the overheads!!

2008-11-18T15:13:00.004Z

Perhaps I will try this next time!

Well in these recessionary times we are all on the lookout to cut costs and for bargains. I pass through that boulevard of broken credit limits otherwise known as Grafton Street twice a day on the way to work, it always dangerous to stop there because you end up spending money! Anyhow to my surprise there was an offer of a free haircut there when I passed today. I noticed this before, but since I needed a cut and it generally costs me €13-€15 to get the job done thought it might be worth a try. So I thought practice what your preach Doorley!

Anyhow its a hairdressing training school and in return for the free haircut you are a guinea pig for a trainee hairdresser. Now my request is not too demanding, four on the back and side and trim the front and top. I am suffering a little from Androgenic Alopecia but not quite having to do the comb over just yet! My only request is that they don't take too much off otherwise my hair just stands up! I empathised with the trainee, she is only 3 weeks training and lacked the confidence to do all the job herself. It was fascinating listening to the interaction between tutor and student, he encouraging and challenging her at various times. She got a bit frustrated at times because she couldn't quite get the hang of some of the technics he was showing her. In the end he stepped in to finish off the job. It may have taken twice as long, but I am happy with the result. It may not be everyone's cup of tea but I got my hair cut for nothing and hopefully contributed something to the next generation of hairdressers. So folks there are savings and bargains to be got out there if you look!

Irish Consumers being "Pounded"

2008-11-17T12:33:00.007Z

Got a call from Newstalk yesterday asking me to comment on their survey of the difference between the cost of clothes in euro on sale here and the price of the same items in sterling on sale in the North and in the rest of the UK. The results of their survey are as follows with the sterling price, the current euro price here and what the price should be based on the value of the euro against the sterling.

H&M

Black Skirt - £19.99 - e29.90 (Exchange Rate e23.27)

Oasis

Knee Length Coat - £75 - e113 ( Exchange Rate e87.29)
Silver Knee Length Dress - £65 - e 94 (Exchange Rate e75.65)
Black T-shirt with frill - £25 - e38 (Exchange Rate e29.10)

Ted Baker

Multi coloured stripped shit £70 - e100 (Exchange Rate e81.47)
Washbag £35 - e50 (Exchange Rate e40.67)
Coat £85 - e120 (Exchange Rate e98.76)

I subsequently did a piece on their breakfast show this morning. This is not news to many of you I am sure, we are all sick and tired of seeing the sterling price and then the hugely inflated euro price. I pointed out that the euro prices are based on the 2007 value of the euro when the it was worth about 66p to 67p. The euro has strengthened considerably since the start of 2008 and is now worth about 85 pence sterling

When CAI raised this issue back in March we were told that there was a time lag and the currency fluctuations would be reflected in the prices after about 6 months, however almost a year later nothing has changed. There is nothing illegal about what these retailers are doing, but it is still galling. I suppose they are charging what they think we will pay. If consumers want to effect change, the best thing to do is to take your business to another shop or else go across the Border as many thousands are doing.

I know some people have said to me can I not pay in sterling to get around this, unfortunately this is a non-runner, there is no legal obligation on retailers to accept sterling. However both the media and consumer advocates can keep the pressure on by highlighting the difference and if consumers continue to vote with the feet the retailers will have to respond.

Fares Fair and the Audacity of Hope!

2008-11-10T20:08:00.008Z

On November 1st new EU rules came into force which will require airlines and others advertising ticket prices for flights to include the full cost including fees, charges and taxes upfront. In addition passengers should get the breakdown of the different categories of costs making up the final price:tariff, taxes, airport charges and other fees. We all know the story, a flight is advertised as free or for a €1, but by the time we pay for it the price is €60. Now there are good deals out there and people can get cheap flights. But the problem with this sort of advertising is that it lures people with an initial misleading offer and having gone through the booking process most people just buy rather than start and search again. So instead of booking a flight with another airline for €50, we pay €60 because the initial cost quoted was a €5.

It would be like a supermarket saying we charge 10c for a loaf of bread, but you have to pay 20c for the car park, 10c for the trolley, 10c for using the check-out. Up to now many consumers didn't have the detailed price information they needed up front to make an informed choice and decision. Price transparency is a key component of any consumer contract, so these new rules are welcome. However there will still be wriggle room for the airlines, some have introduced a number of discretionary charges such as check in and baggage charges, so it will still be difficult in some cases to know the full cost until consumers gets to the point of purchase. Consumers will have to factor these extra costs into account.

The other positive measure being introduced is that airlines will not be able to impose charges on consumers without their express consent. Up to November 1st airlines such as Aer Lingus, Aer Arann and Ryanair have automatically included insurance on flights booked online, requiring the customer "to opt out" if they wanted to exclude an extra such as insurance from their purchase. I have come across cases where the consumer was not aware that they were paying for insurance or thought they were required to buy insurance. Obviously its a matter for each consumer to decide, but do you really need to pay insurance on a flight from Dublin to London? The merit of many of these insurance policies is questionable in my view. From now on the websites of all airlines should be designed so that consumers have "to opt in" to order and pay for insurance and or other extras if they want them.

The key thing now is to ensure that these new rules are enforced. In the first instance that's the responsibility of the Department of Transport and I assume the National Consumer Agency, but also us as consumers to report if we find the new rules are being breached.

I also see that the EU Commission has launched a website for consumers where they can get advice on and report what they consider are unfair commercial practices. Looks like a good initiative.

I cannot leave the blog this week without a mention of events in the US. Well as my friends know I am a bit of a political and election junkie. Watch and enjoy elections and politics from all over the world, and in keeping with habit since 1992 (then all I had was BBC Radio 4) stayed up for the elections. Apart from watching the historic election of Barack Obama, I was keeping an eye on the Senate and House races, would the Democrats get a filibuster proof majority in the Senate and would the 2006 Democrat surprises hold on? My friend Dominic tells me that there is a technical term for this affliction called Psephology not sure if there is any cure! I had been keeping an eye on North Carolina since the summer and was really pleased to see Kay Hagen win over Elizabeth Dole, who ran a nasty and negative campaign, especially in the end.

Inspiring stuff

The thing that inspired me most about Obama was the triumph of hope over fear and optimism over negativity. That got me thinking about consumer advocacy where there is a danger of always being negative, of always knocking, of always being the hurler on the ditch. Yes it is important to highlight deficiencies, but consumer organisations and advocates also need to be positive and put forward solutions and proposals. We are all too familiar with the naysayers, the hurlers on the ditch, the bores who come to meetings, never have a good thing to say, and just criticise and who stay talking when there is nothing left to say. These are the sort of people we all stop listening to after a while, so like people, organisations need to avoid falling into this nexus of negativity or else we won't be taken seriously after a while too.

Classic Naysayers, but at least they were funny unlike some I know!

Watchdog teeth and fake grass!!!

2008-10-29T10:00:00.012Z

I have been critical of the Financial Regulator for being too timid in the past. However I am happy to acknowledge when they prove me wrong by their recent decision concerning Quinn Insurance. I don't know the full details of the case but from press reports it would appear that the Financial Regulator investigated and came to the conclusion that regulations were breached and issued quite a hefty fine. Leaving aside the particular case my view is that such action sends out a strong message to a very powerful sector of our society, i.e. the Financial Services Sector that they are not above the law.

The challenge of being involved in any consumer organisation is that the consumer generally thinks you are too soft on the vested interests, while the vested interests take a radically different view and use all opportunities, both directly and indirectly to undermine you and your organisation. And of course the indirect approach is more difficult to counter. In the United States there is a growing phenomenon where big corporations fund individuals or groups who establish organisations through various means (usually one person outfits) who portray themselves as advocates for a cause when in fact their primary goal is to undermine a campaign or cause by spreading misinformation and muddying the waters. Some examples are fake environmental groups funded by the oil industry that contradict the views of environmental organisations. All you need is one person and organisation with a plausible name and a website and hey presto you are in business. What these fake organisations do is called astroturfing, to distinguish them from real "grassroots" organisations. And it may not always be easy to flush them out, but I suppose key questions to determine their bone fides would be, who is running and behind the organisation, does it have a real "membership", do they have any conflicts of interest and are these declared and how is the operation being funded and by whom?

Astroturfing at play!

It came to mind when I was asked about CAI by a consumer who thought we were too soft on the banks and the financial services sector. I outlined what CAI had consistently called for and I also informed him that I didn't have any bank shares nor do I work in the financial services sector. But I understand his frustration as the banks, stockbrokers and insurance companies hold huge sway in our society and have huge influence on our political system. The most recent example was the bank guarantee scheme, which had the fingerprints of the banks all over it and as a result it was great for the banks but bad for the taxpayer and the consumer. That nexus of the political and economic world was exposed in the tribunals, where companies make donations to politicians and political parties "to support the democratic process". They may be acting within the law, but the perception (it may well be false) among the public is that they are paying for access and influence and also improving their chances of getting state contracts. On the other hand CAI and many other campaigning organisations have to work very hard on limited resources to get a meeting and a hearing. As we have seen time and time again those who make donations have easy access and sometimes informal means by which to influence decisions.

I admitted to my acquaintance that it is definitely not a level playing pitch, but things are better now. There is more independent regulation now of a number of sectors. I think Joe Meade in the Financial Ombudsman's office sets a good example, he is willing to take on the big boys on behalf of the ordinary consumer. Without him does anyone really think the average consumer would have a hope of taking on the AIBs, Davy Stockbrokers and Quinn Insurances and any other large financial company. I have no problem with actors in the broader consumer movement railing against the actions of individual regulators (as I have done), but what surprises me is that some appear to be opposed to the idea of strong, effective and independent regulation. That is playing into the hands of the vested interests who want to retain or return to self and weak regulation. I recently wrote on the need to revise the regulatory regime being proposed for the legal profession, because what is on offer is not much of an improvement on the unsatisfactory process we have at the present time. We have a long way to go and a hard fight ahead to get real and effective regulation for the consumer on all fronts, but it is a battle worth fighting for.

A French Lesson for Irish Consumers?

2008-10-19T16:59:00.012+01:00

I really wish I had paid more attention during french classes at school. I was over in Paris for two days this week attending a seminar and meeting with some old friends and like every time I am there my lack of french comes home to roost. OK I can order a beer or find out where the toilets are, but once it gets more complicated than that, like having to ask directions I have to revert to English.

Could we as consumers learn in the debris of the financial crisis here at home from the French as well. Yes some of their banks have come a cropper on the international markets, but primarily for investing in toxic assets from the US and of course there have been now three cases of rogue traders doing serious damage to the balance sheet. The most famous of course has been Jérôme Kerviel who it is alleged cost the Société Générale bank over €4bn. On Friday when I was there another scandal broke concerning Caisse d'Epargne when four traders cost the company €600m, which given the numbers being thrown around in recent weeks sounds like small change. I had never heard of the bank before, but happened to pass what looked like one of their older branches when I was walking home from dinner on Friday night and took a photo.

The French mortgage market from what I understand is radically different from ours and that in the UK and as a result French consumers are insulated from the worst excesses of the current turmoil, where individuals and families are under terrible financial pressure with rising debts and home repossession. Most home loans are given out on long term fixed interest rates, they don't have the plethora of variable and tracker mortgages that were so popular here. And by long term I don't mean 3-5 years, I mean 20-25 years. That means that French mortgages holders know how much the mortgage will cost them many years in advance. Unlike their Irish counterparts they do not hang on the words of Jean-Claude Trichet as to whether interest rates will go up or down.

When you think about for a while, it is a bit crazy to tie the cost of our debt on our most valuable physical asset, i.e. our home to the vagaries of the financial markets and the deliberations of the European Central Bank. A 1% rise in interest rates has the potential to cause real misery for many homeowners. I suppose its all very well in good times, but the weaknesses in the system are plain to see in the current climate. That's not to say that the French system is perfect, it is much more difficult to get a home loan there, so many people here would not have been able to buy a home if they lived in France.

And of course then there is the cost, would it cost more if people could only purchase a long term fixed rate mortgage compared to the option of a short term variable mortgage? Obviously each case is different, but while in the short term the French mortgage might cost more, in the long term it would appear to cost less and of course give much more security and peace of mind. That brings me to an interesting conclusion in a report on the UK Mortgage market (Miles report) that examined the issue of fixed long term mortgages. It found that consumers really only focused on the immediate short term cost of the mortgage. Can I make the repayments in the initial months? In the UK they rarely looked at the overall cost or the cost if interest rates were to rise when taking out a mortgage, in most cases it is the same here and I can understand why. People assumed that mortgage rates would remain stable and the prices would keep going up. The lenders are supposed to highlight potential pitfalls to borrowers, but I imagine in recent years when money was being thrown at people and most people thought the party would go on forever, this was largely overlooked. However necessity is the mother of invention and therefore it might be an opportune time for Government to examine the pros and cons of encouraging the take-up of long term fixed mortgages here.

PS: The Bank Guarantee Scheme was published on Wednesday, I was on The Breakfast Show on Newstalk on Thursday highlighting how this was a great deal for the banks, but a bad deal for taxpayers and consumers. Clause 44 says "A covered institution shall not pass on the costs of the guarantee to its customers in an unwarranted manner". This is vague, meaningless and unenforceable. Minister Lenihan says that the costs won't be passed on, but once the dust settles in a few months, I wouldn't be so sure.

Consumers must not be short changed!

2008-10-02T14:38:00.012+01:00

All I can say is wow...what an amazing week. Little did I know when I attended a meeting with Minister Brian Lenihan on Monday afternoon at 5pm about the Budget about what was going on behind the scenes and the astonishing announcement made early on Tuesday morning.

Most people agree that this was a bold move that appears to have restored some sense of stability in the Irish Banking system in the short term. However none of us know what the impact will be on the banking sector, the economy and most importantly from my perspective on the consumer. A lot has been written about it and of course we all acknowledge that the global credit crunch played a role. But the Government, regulators and banks have to face up to the reality that much of the problem was home grown as well. The Irish banks shovelled out huge loans to developers and builders in the past 5 years and it was the concerns of other banks about the exposure here that led to the crisis on Monday. Morgan Kelly from UCD had a very good article about this in the Irish Times on Thursday. With Charlie Weston in the Independent leading with a story telling us the banks could be owed €112bn by developers.

Despite the fact that not a cent has been paid by the state because of the guarantee, it is already or very soon going to cost the taxpayer and consumer. As the latest exchequer returns show the Government will have to borrow billions to balance the books, with the guarantee the cost of this credit will shoot up. The other suggestion coming from sections of the financial services sector is that charges and fees will have to increase. This would be totally unacceptable. It was the taxpayers who threw the banks a lifeline in their hour of need, not the shareholders or investors, so is our reward to be higher charges and fees, while those who created this mess, the fat cats at the top get off scot free?

No George Baileys here!!

The Government needs to do 3 things to protect consumers as a result of their decision to guarantee and bail out the banks. Firstly once the dust has settled they must conduct an independent investigation into why this emergency bailout was necessary. Is the current regulatory regime appropriate? Does the Central Bank and Financial Regulator have the necessary powers and did they act appropriately?

Secondly the Government must legislate or regulate to ensure there is no attempt to pass on the cost of this in the form of increased bank charges and fees. It would be all to easy for the banks to pass on the costs of this to the consumer, as we have seen with the airlines when the price of oil went up. Therefore any bank which signs up to the gaurantee scheme would forfeit the right to increase these costs. This can be easily done as all charge and fee increases are already regulated by section 149 of the consumer credit act.

Thirdly the Government must legislate to put the key provisions of the Consumer Protection Code on a statutory footing. The days of "principles based" and light handed regulation are over. We need strong regulatory action to protect consumers, who do not get bail outs or guarantees when they run into financial difficulties.

If the Government fail in this regard, it will be the taxpayers and consumers whi will feel short changed in this whole sorry saga.

Would a VAT tax holiday on electricity make cents!!!!

2008-09-13T17:08:00.005+01:00

I see that EU Finance Ministers failed to agree measures to cut VAT on a range of services at a meeting today. Inflation and prices are rising across the EU and jobs and spending are under pressure, so obviously some members states see a VAT or sales tax cut as one way to cut prices and stimulate spending and job creation. As we know from the recent Lisbon Treaty debate any change would require unanimity.

VAT or Value Added Tax is a levy on goods and services, essentially a tax on consumer spending. The higher the net price of an item, and the higher the VAT rate, the greater the final purchase price. At almost €14.5 billion in 2007, VAT made up 31% of Exchequer tax revenue. Therefore VAT is an important source of Government revenue, which makes removing or reducing VAT much more difficult, particularly in the current economic environment. And of course changes to VAT rules may require EU approval further complicating any proposal to change rates. Before the last election the Greens proposed a cut in VAT instead of a cut in income tax, pointing out that in fact compared to income tax, VAT affects everyone. And as we know as electricity, gas and petrol prices increase so does the actual amount of VAT (and the amount the Government receives) we have to pay increase.

It's hard to know if an across the board cut in VAT rates would lead to lower prices. Charlie McCreevey cut the top VAT rate by 1% to 20% when Minister for Finance, but one year later reversed his decision on the basis that the savings had not been passed on. That's a big problem, how could the state and consumer know for sure that any cut is definitely passed onto the consumer. However there is one bill which the vast majority of households have to pay on which the VAT cost is clear and if it was cut or removed then there would be an immediate saving to all households. And that bill, the ESB bill of course, we all pay 13.5% VAT. Electricity prices have been soaring, rising by 18% just last August. This is going to affect many households over the coming months, people will have to forgo other essential items or cut back on lighting and heating. The Government did move to increase benefits for those in receipt of the Electricity Allowance which is good, but this only benefits those in receipt of this social welfare payment or about 358,000 households or 25% of the total. What about the many households who won't qualify but will really feel the strain of the higher cost of electricity? Those in employment don't qualify for this payment, so households where the main wage earner is on a low income get no support to meet these increased costs.

Fox News Analyst agrees with Gas Tax Proposal...must be good then!!

I think it would be worth exploring the possibility of a VAT tax holiday on electricity costs, basically a decision to reduce or abolish VAT for perhaps a year in the hope that electricity costs come down. This is akin to the gas tax holiday proposed in the US. The benefits of a VAT holiday is that it is a short term measure designed to ease the pain now, leaving the option open to Government to reintroduce VAT when hopefully the price of electricity comes down as global oil prices come down. This measure could save the average household about €100 annually. This is not as complicated as a general VAT reduction in that there is only one supplier (ESB) which is state owned and as I outlined the consumer would definitely see the benefit as the price of electricity is set and outlined clearly on every bill. What do you think?

Putting calories on the menu and on the agenda!

2008-09-06T18:04:00.005+01:00

Back from my holidays in the Middle East, missing the sun and lack of rain already! I like my food, but tend to stick to the tried and trusted, but was a little more adventurous than normal on my travels. I have eaten hummus before, but over there they serve it with everything, so I ate a lot of it. One thing I really liked probably because it is full of sugar and very sweet was Kanafeh. And not just any old kanafeh, but I got it from a food stall in Nablus, the home of kanafeh. It was only gorgeous although I am sure the calorie count would frighten me. Probably something that is perfect as a rare treat, but certainly not for consumption every day.

Earlier this year the authorities in New York brought in new regulations requiring restaurants and fast food outlets to put the calorie count of all meals on their menus. Unsurprisingly the restaurant owners are not too happy with these new regulations and have gone to court to have them struck down. I can understand their fears, but surely the consumer is entitled to this information. It seems the vast majority of consumers underestimate the quantity of calories that are contained in certain meals and dishes. We all know that fast food should not be consumed every day, but do people know that the calorie count of many meals can actually be equal to or more than our recommended daily calorie intake allowance....unless you are Michael Phelps of course.

Calorie Shock!

In fact it seems that some meals and dishes which we assume are healthy can in fact have a lot more calories than we think, such as meals called salads. And of course this does not only apply to fast food outlets, it applies to restaurants of all types. In general most people know the score on fast food, its quick, tasty and fills you up, but not something to eat regularly. However for other meals and dishes, we don't really know, we might think they are really healthy, but they may actually contain lots of calories. With obesity related conditions and diseases on the rise, giving consumers more information on the calorie content of the food they order has to be good. It doesn't mean that consumers will eat out or order less, consumers may just order smaller portions, different meals and dishes or cut down on their food intake for the rest of the day.

The Economist article (see link above) highlights how some restaurants have adapted in New York and are cutting portion sizes and calorie content, as well as cutting their own costs. And one company Le Pain Quotidien thinks it has profited by adapting quickly to the new rules and are planning to provide information on calories in cities where it is not required by law yet.

I have no doubt some people will call this another attack by the nanny state, in the same way that they attack any measure or proposal to better protect or assist the consumer. All these regulations are doing is assisting the consumer to make an informed choice. Personally I support these new regulations, I think it will be only a matter of time before they are introduced in Ireland.

All hands to the pumps!

2008-07-27T23:32:00.006+01:00

Motorists are finding the current increases in petrol/diesel prices a big drain on their income. I know to fill up my tank it is now costing well over €53 compared to €40 a year ago. The official statistics confirm this with diesel prices increasing a massive 65% in the last 4 years and petrol prices increasing by almost 40%.

Despite repeated calls from CAI and others to Government to do their bit by reducing either excise or VAT on petrol/diesel they have steadfastly refused to do so. The irony of course in all this is that high petrol/diesel prices are in the interests of Government because the higher the price the greater the amount of VAT revenue generated for the Exchequer.

However given the huge hole fuel costs are burning in all our incomes, it is not enough for Government to sit back and tell us to shop around, they have a duty to assist us in that regard. Therefore there are three things the should be doing (which I am calling Fuelwatch Ireland) to assist motorists with high fuel costs and to drive greater competition at the pumps! As a preface I want to say that I am in favour of measures to car journeys and oil dependency, but that cannot be achieved overnight and we all don't live within walking distance of public transport, so in the meantime something must be done.

It could consist of the following aspects.

A statutory fuel price database where all service stations in the state would be legally required to register their current prices so that consumers could check online where they could get the cheapest prices in their area. Fuelwatch Ireland would be based on the very successful fuelwatch database in Western Australia which is now being expanded across Australia. Legislation would be required to ensure all service stations comply with the scheme.

There are a number of websites already which provide information on petrol and diesel prices and those running these websites must be commended for the assistance and information they provide. However since there is no obligation on the stations to cooperate with these websites and they depend on information being sent in by motorists and in some cases the prices can be out of date. A statutory website would include all stations and would ensure that the information provided was up to date. Like the grocery price surveys, this would assist consumers to shop around and get the best price. It works very well in Australia, I cannot see any reason why it couldn't work here. It would be quick, easy and cheap to do.

I also think we need to investigate the price of fuel at the pump. I would really like to see the Government commission a study to investigate whether fuel prices in Ireland have increased in line with global prices or if price increases have surpassed global oil prices. Also would be useful to examine the extent to which price decreases have been passed onto the consumer at the pump as quickly as price increases appear to be. I have no evidence to indicate that price reductions are not being passed on, but given the significant fluctuations in price in the last year, it is important to make sure that the current volatile market situation is not being exploited further.

And finally I think we could assist motorists to maximize fuel efficiency when using their car which would be good not only for the pocket, but also kinder on the environment. I am not an expert on this, but the Government could develop and distribute practical information to all motorists on the national vehicle register on how they can reduce their fuel costs. All register vehicle owners could be sent a leaflet and this information could also be put online. While this leaflet would outline the options for reducing car use, it would also provide information on how motorists could reduce fuel use even while using their car. It would cover areas such as servicing, speed and driving patterns, tyre type etc where consumers could reduce their fuel use which we don't always think about in relation to reducing costs, well I don't anyhow. This could be easily done with the assistance of motoring experts.

Basically in my humble opinion it's time for the Government to do something to assist motorists given the high cost of fuel. They can't reduce the price of a barrel of oil, but they make a contribution and these proposals would go some way to allievate all our pain at the pumps!

Petrol protests Indonesian style!

Stop the Lights another ESB price increase!

2008-07-13T15:26:00.009+01:00

Friday was a bad day for consumers following the announcement that the Commission for Energy Regulation (CER) had sanctioned a 17.5% increase in electricity costs for domestic consumers. This is going to hit us all in the pockets as electricity is a cost most of us cannot do without, particularly as we face into the autumn and winter months. I know the increased cost may encourage some householders to cut back on unnecessary use of electricity, but in general we all need "the electric" to heat our homes and to use a range of modern conveniences. This increase will in particular hit those on low and fixed incomes, some will get support through the households benefits package but others will probably have to cut back and perhaps end up ill as the result of a lack of heating or will go into debt to meet these bills.

OK I acknowledge that utility prices were always likely to increase given the increase in oil and gas in recent months, but the manner and nature of the announcement were troubling from my perspective. It smacked of very co-ordinated news management between the regulator and regulated in my view and we were all softened up for the bad news well in advance. For months we have been "informed" that prices were going to increase massively, some figures of up to 30% were mentioned. A day before the announcement by CER, ESB held a news conference on their 2007 annual report were they pre-announced their decision to make a €300m rebate to relieve costs to consumers. Then a day later, CER comes out and says they are planning to sanction a 17.5% increase (although technically it the final decision will be made on July 18th) There was no consultation with CAI or other consumer bodies as far as I know and of course the timing of the decision on the day after the Oireachtas rose for the summer recess meant it would get less political scrutiny. Also the rationale and background available at present from CER for the price increase is paltry running to a page and a half.

One response to the price increase!

There is little we can do about this price increase now, however it does highlight a need to change the process so that the interests and voice of consumers is fully taken into account. More information is required as to how this price increase was sanctioned, a full public consultation process and a real examination of ESB costs to determine if they can achieve greater internal savings rather than just passing on costs to the consumer! The €300m once off rebate will do nothing to address the long term inefficiencies of ESB. We know that the wage bill in ESB is much higher than comparative providers in other European countries. And we need competition so that domestic consumers have the choice of switching providers for better value if want to, which domestic consumers cannot do now almost 10 years after supposed deregulation.

Of course like CIE the fact that the Government is both the owner and regulator (if indirectly) of ESB creates a conflict of interest. The Government got a significant rebate from ESB last year and given the current state of the public finances, it is unlikely that the Government would want to forego this. However the cost to individual households and to our competitveness should in my view take precedence over temporary funding streams....but don't hold your breath!

Capital Punishment!

2008-06-27T17:01:00.004+01:00

I got a call from Newstalk 106 last week to discuss with Eamon Keane on their lunchtime show a survey they had done on different prices in Dublin, Cork, Limerick and Galway. Overall it shows that the cost of fuel, hairdressing, cinema, drink and take-aways work out a lot more expensive in Dublin than in the other cities. For example, a wash, cut and blow dry costs on average €64.2o in Dublin, while it only costs €41.40 in Galway. A cheeseburger and chips costs €4.96 in the capital, while it is only €3.96 in Limerick. An adult evening ticket is €9.50 in Dublin, while only €8 in the "real capital" of Cork. But just in case Dublin people feel they are always getting ripped off, the price of petrol and diesel was cheapest in Dublin compared to the other three. In fact Galway came out worse here, with the highest prices for petrol and diesel at 135.9 and 145.7 respectively, interestingly the research found that of the 5 petrol stations surveyed, 4 had the same price while a fifth was slightly dearer. This highlights the lack of competition down there and is mirrored across the economy where lack of competition leads to higher prices and costs for consumers.

This survey matches the analysis by the CSO which also found that average price levels were 4.9% higher in Dublin. Funnily enough though, some products like flour, milk and bread are on average cheaper in Dublin. So while the consumers in the capital take the biggest hit in the pocket overall, there are some areas where they save money. Overall though as the ESRI report
confirmed last week, the celtic tiger era is over and inevitably some prices will have to fall if retailers and providers want to do business, because at current costs people do not have the disposable income they had previously.

Anyhow I am glad to say that I have survived my eight day in recession!

Aah the Good Old Days!!

Money is too tight to mention

2008-06-18T11:37:00.008+01:00

Consumers are really feeling the pinch, the cost of ordinary and essential items such as food, petrol/diesel, electricity and gas have soared in the last 12 months. Inflation has been at or near 5% since December 2006. Like the Trocaire ad about climate change, the surge in the cost of living is affecting everybody but not equally. People on low and fixed incomes are under huge pressure.

That was borne out by the recent initial report on financial capability by the Financial Regulator (FR). They define financial capability "as a broad measure of the knowledge, skills, attitudes and behaviours necessary to manage personal finances and to choose and make appropriate use of financial products"

Now I have been critical of the FR on some issues, but I want to praise them for this piece of work. Even though it is an initial report, it looks like being a very useful report. However it is vital that the findings are used to guide the work of the FR over the coming years.

Simply Red and Simply Sung...Money is too tight to mention!

The key findings of the report are;

37% of consumers are having some degree of difficulty keeping up with bills and credit commitments.
60% and 66.2% respectively of recently divorced and separated people have some degree of difficulty keeping up with bills and credit commitments.
13% have found themselves in financial difficulty (3 or more months behind payments with regular commitments) in the last 5 years.
27% of consumers have no idea how to make a complaint to a financial services firm and 26% say they only have some idea of how to complain.
25% of respondents or their partners have experienced a large drop of income in the past three years.
53% would strongly agree or tend to agree that they would trust the advice of financial advisers and accept what they recommend.
63% would strongly agree or tend to agree that they have a clear idea of the what financial products they need without consulting a financial adviser.
Only 36% understood that the value of a tracker bond would be directly affected by stock market performance.

Interesting stuff, but what does it all mean or what can be done you might ask.

Well its clear that many people are finding it hard to make ends meet. It's important that they know there are excellent services out there that can help such as the Money Advice and Budgeting Service who can assist if people have debts and are struggling to make ends meet. They cannot give you money, but they can help you manage your income better and draw up a reasonable plan to pay off debts. I know some people may find it difficult to accept they have a problem but its a free and in my experience good service.

Perhaps the FR and MABS could link up and run a publicity campaign.

Also people still don't know how to complain or perhaps if they have a valid complaint. Thats a worry. One thing the FR could do is to publicise the consumer protection code and make sure lots of copies are available in all financial institutions. They already have a very good summary, called the little red book which should be circulated widely. Consumers should know that the code says that financial institutions have to act in the best interests of customers.

Despite all the publicity and contoversy over the last decade about wrongdoing and misselling (and even in the last few weeks concerning older people) by financial institutions and advisers, its clear many people (up to 53%) still find dealing with finance and financial institutions challenging and appear to be saying they trust what they tell them. That's disturbing, because recent evidence has suggested that front line staff are under pressure to sell you products which may not always be in the best interests of the consumer. Would you go into a garage and tell the salesman that you want to buy a car and let them decide what is good for you. No you wouldn't and the same should apply to financial products, consumers should always get some advice and/or a second opinion.

Stuff, stuff and more stuff!

2008-06-03T23:34:00.006+01:00

I have just returned from Istanbul where I was attending the European Foundation Centre Annual General Assembly at the invitation of the Carnegie UK Trust where I am a trustee. It’s an amazing city, 16 million people, thousands of years old, known previously as Byzantium and Constantinople, the crossroads between Europe and Asia, Christianity and Islam and a major trading centre.

I spoke at one of the sessions, but the most interesting part of the conference for me was a workshop entitled “Slowing the treadmill of consumption”. Now you might think as Chair of a consumer organisation that I wouldn’t be entertaining such heresy! However I don’t promote or support rampant consumerism, the concept that people need to buy, buy, buy and shop till they drop. I am a consumerist,(consumer activist) essentially I want people to get value when they buy goods or services and if things go awry I want to ensure their rights are upheld and vindicated. I would also encourage people to be conscious consumers, taking into account the consequences of their spending on their personal finances and on our planet. Yes, people should be able to enjoy their disposal income and buy goods and services that will enhance their lives, but it is important to know the limits of consumerism as well.

Anyhow at this session Annie Leonard in person gave her amazing presentation on the impact of the rampant consumerism in the western world on natural resources. Its called “The Story of Stuff” and you can watch her here. Her work has had a big impact already, having been watched by over 2 million people. Some of the more sobering facts are that if the rest of the world consumed at the rate of American consumers, we would need 5 planets. Of course we only have one!

She also talked about how planned obsolescence, the way in which manufacturers deliberately produce goods that will break easily and will have to be replaced in a very short period. That struck me recently when I was doing a bit of spring cleaning, I came across an old electric kettle which hasn’t been used for years and must be 40 years old and it still works, whereas an electric kettle that can only be 2 years old won’t. I used to think that the buy it cheap and throw it away and buy another one was the modern and best solution and that the annoyance of my mother at the fact that goods didn’t last any time and couldn’t be repaired was a bit dated. But in fact she was right all along, our planet cannot sustain the throwaway culture. Of course this is not an attitude that has happened by accident, it has been driven by the corporations involved aided and abetted by the advertising industry, which bombards us with ads every day telling us that we need to buy, spend and consume in a certain way to be happy, cool and successful.

The other speaker at the session was Sam Thompson from the New Economics Foundation in London. His presentation was also very interesting, particularly their work on the Happy Planet Index. He outlined that conventional economic theory suggests that rising consumption is strongly related to individuals well-being, however that is not the full story. Yes studies show that people living in poverty are less happy than those on better incomes, makes a lot of sense. However he argued that their research also shows that once we achieve certain levels of income and consumption and that our basic needs are met that the happiness levels of the population reaches a plateau. For example the overall happiness and well being of people with incomes of €30-40,000 is not all that different than people on incomes of €200,000.

So that would suggest that the 3rd plasma TV won’t make us 50% happier than the neighbours who only have 2! Of course that runs counter to the constant barrage of marketing and advertising that tells us the more we buy and consume the happier we will be. And of course a lot of the economic growth of recent years has been built on consumer spending and the more recent discussion on the global economic downturn has focused on declining consumer confidence. I know a lot of jobs in our western economies depend on consumer spending, but as both presentations outlined our current consumption patterns are unsustainable. A lot of food for thought!!

The Grand Bazaar

After that session I felt very guilty for visiting the Grand Bazaar in Istanbul, which for centuries has been all about buying and spending….there are over 4,000 shops…but taking on board all I had heard I only bought stuff I really needed….I swear!

VRT and Motor Tax, Cowen will still be singing all the way to the bank!

2008-05-12T21:23:00.010+01:00

Last December when Brian Cowen delivered his last Budget as Minister for Finance many people were watching to see what he would do on stamp duty, how much he would increase social welfare or how much in excise duty he would add to drink and cigarettes. However in the midst of all this stuff, Cowen also announced a major reform of Vehicle Registration Tax (VRT) and motor tax. VRT is a tax you pay for registering your car, but effectively it is a tax on a new car purchase, while motor tax is an annual tax which goes into the Local Government Fund, which is distributed to Local Authorities.

At present all cars are taxed on the basis of engine size. However from July 1st 2008 all cars purchased will be taxed based on their CO2 emissions ratings. Therefore cars that are cleaner and more environmentally friendly will be taxed at a lower rate and the gas guzzlers will face increased taxation. The change in price for some cars will not be much, but for others it could be quite a lot more. For example, a Toyota Avensis 2.2 D4D should based on my calculations (all prices quoted by me here need to be confirmed by Revenue Commissioners as I am going on the basis of information available to me on third party websites) would be liable to less VRT and therefore reduce in price from €35,105 to €31,896 a drop of over 3k. BMW assert that the price of some of their models will reduce by up to €8,000 as a result of the changes, although some of their models may also increase in price. Of course some models will increase in price, for example one of the most popular sellers in Ireland, the Ford Focus will increase by about €500. The gas guzzling Land Rover Discovery will increase by about €5,500.

New regime could be good for sale of some BMW models!

Likewise the motor tax charges on all newly registered car from July 1st 2008 be based on a CO2 emissions rating. There will be 8 bands and again the annual motor tax charge will change significantly for some models. The aforementioned Toyota Avensis will reduce from €791 pa to €431, a cut of €361. Others will increase, for example a Saab 9-5 2.0t petrol will increase from €591 pa to €1000. In general it seems diesel cars will become cheaper and the percentage of diesel car sales should increase from the current 20%. Cars registered bought between Jan 1st and June 30th 2008 can be taxed at the engine size rate or co2 emissions rate depending on which is lower.

Car sales are down over 9% on this time last year. Some blame the confusion over the new system, although many people may be holding out for their choice to reduce in price.

I have two main concerns. Firstly the lack of information on the changes available on the relevant Government website. The Department of Finance, Revenue Commissioners and Department of the Environment only have generic information on the new system. As a potential purchaser of a new car now or after July 1st, I wouldn't get any information on the impact of the new VRT and motor tax system on any of these websites. The only information available I am aware of is on third party websites. The Society of the Irish Motor Industry have a VRT and motor tax calculator on their website while motorcheck.ie also have a VRT price calculator. While this information is welcome and very useful, neither bodies have the final say on changes and cannot probably state 100% that all calculations they give will be the ones applied by State bodies.

The other issue I am concerned about is making sure that the reduction in VRT is passed onto the purchaser. If this measure was introduced to encourage motorists to buy greener cars, then the savings should be passed on fully to the consumer in the same way that I am sure the increases in VRT will be. This is something I plan to follow up on.

VRT brought in €1.4bn and motor tax about €1bn to the state coffers in 2007. I am sure whatever consumers do, the Brian Cowen and the Government will continue to sing all the way to the bank!

Our new Taoiseach Brian lashing out the verses in Clara!

Charges of the Heavy Brigade!!

2008-04-27T15:09:00.003+01:00

The news was dominated this week by misdeeds in the financial services sector. First we had the disclosure that Bank of Ireland had lost 4 laptops containing the personal, financial and health information of up to 10,000 customers. Bad and all as that was, the abject failure of BOI to inform the Data Protection Commissioner, the Financial Regulator and most importantly those affected immediately reflects very badly on the bank. CAI has called for BOI to pay compensation to all those affected, see our press release.

Then we had another damning report from the Financial Ombudsman in relation to the misselling of financial products to elderly people and the attempts by financial institutions to wriggle out of their commitments to people who had serious illness insurance cover. This is awful stuff, here we have vulnerable people, some in their 80's and 90's and then others whose lives have been turned upside down by serious illness and they are out through the wringer when they are least able to deal with it. Kathleen Barrington has an excellent piece on this in Sunday Business Post today.

There was also turbulence in the mortgage market, with some mortgage providers reducing their commissions to brokers, which could potentially lead some to direct business to where the best commission is rather than where the best deal is for the borrower, see more on that here.

Across the water in the UK the big story was the judgement in the High Court in favour of the Office of Fair Trading, and against all the high street banks.

ITN News report on the case.

The judgement gives the power to the OFT to examine the fairness of charges imposed on customers in relation to unarranged overdrafts, such as people going into overdraft. Thursday's decision was a great one for consumers, however its likely that the banks will appeal all the way to the House of Lords, so it is not over yet. In some cases consumers are charged £35 each time this happens, when independent analysis suggests that it costs the bank about £2. From 2005, thousands of customers have begun to reclaim charges. The charges here are not as high as in the UK, which is primarily in my view because of section 149 of the Consumer Credit Act which I wrote about here previously. And the current charges chaos in the UK is a timely reminder why we need to retain section 149.

However the judgment also points to the need here to review the existing charges imposed to determine their fairness on Irish consumers. In particular there are many people in the sub-prime market who are being charged exorbitant fees and charges which only serve to make it even more difficult for them to sort out their finances. CAI will be writing to the Department of Finance seeking such an independent review of charges.

Tonight is my last night playing Roger in "I do not like thee, Dr. Fell" with Dunshaughlin Players. Its been hard work over the last few months learning the lines and moves, but performing has been great fun so far, especially with such a great cast, director and backstage team. Looking forward to the finale tonight and a few beers afterwards perhaps!!

Getting the messages and message!

2008-04-20T23:46:00.007+01:00

When I was a young fella growing up in rural North Tipperary, we used "to go to Borris (Borrisokane) to get the messages", usually from a small number of local shops. Groceries were things that Americans used to buy in large supermarkets and bring home in brown paper bags in TV shows like the Brady Bunch. Shopping patterns have changed a lot since then and many Irish consumers are now buying their "groceries" from large multiples like Tesco, Dunnes and SuperValu.

The week before last the Competition Authority brought out two reports. The first report focused on the effects of the abolition of the Groceries Order in 2006. The analysis suggests that while prices fell as a result of the Groceries Order being abolished, most of the gains have been wiped out by the significant increase in the cost of food globally. There has been quite a bit of comment in relation to this report, so I am not going to go on about it again.

The second report published on April 9th didn't get any coverage that I am aware of, but I found it fascinating. Its entitled "A Description of the Structure and Operation of Grocery Retailing and Wholesaling in Ireland: 2001-2006". Its very useful because in reality the Groceries Order was always in my view a minor factor in determining the cost of groceries. Yes I supported its removal, but it was not the magic bullet to cheaper prices. What we require to improve competition and ensure consumers get a better deal is a well informed policy.

The report tells us that the groceries market was worth €11.6 billion in 2006. It describes really well the nature and structure of the market, between what it calls the "vertically integrated retailers" such as Tesco, Dunnes, Aldi etc, the affiliated retailers operating under the brand of the likes of SuperValu, Londis, Mace and Centra and then the independent retailers. Many people complain about the decline of the local village shop or the corner shop and that is borne out by the report as the number of outlets has halved from 13,775 in 1977 to 6,293 in 2006, with about 55% of these being independent retailers.

Of course size is what counts and while there are less outlets, they have been replaced by large and medium sized supermarkets with a wide variety of products. I was surprised to read the significant position of the other retailers in terms of presence and market share. I had incorrectly assumed that the Tesco and Dunnes were the big beasts, under pressure now from Lidl and Aldi, but that the others were in the ha'penny place. However the report shows that while Tesco has the largest market share at over 18%, SuperValu and the Independent retailers are number 2 and 3 respectively, with Dunnes coming in 4th and Spar 5th.

The good news is that the report indicates that between 2005 and 2006 consumers were shopping around more, by visiting more retail outlets. Depressingly, if of no surprise, 82% of shoppers use their car to do their main weekly shop compared to 16% who walk and only 2% use public transport, and travel on average 22 minutes to do their main shop.

The report indicates that Irish shoppers are more brand conscious. A statistic that stood out for me was that own brand products comprised just 7% of total sales here compared to 45% in Switzerland, 30% in Germany, 28% in the UK and 22% in the Netherlands. While my assumption is that own brand products usually cost less consumers may worry about the quality or value of such products. Perhaps this is fed by memories of the now long gone, Quinnsworth's (now Tesco) own brand "yellow pack" range which is still used as a term to describe a product, service and even a job which is considered sub-standard. As well as price surveys, perhaps we need to work on encouraging Irish consumers to free themselves of brand loyalty or as some would call it brand tyranny.

The report shines a light on a very significant market and the details and information will hopefully be used to inform consumer policy. The Competition Authority is following up this report with a study on the retail planning system as applied to the grocery sector. That will also be very useful in light of the importance of location and convenience in terms of retailer selection.

I cannot let the day go without mentioning the great win by the Tipperary hurlers in Limerick today, couldn't make it due to other commitments, but had the pleasure of attending the game last weekend in Nowlan Park against Kilkenny. Here are some highlights of today's win courtesy of www.premierview.ie
Tiobraid Arann Abu...bring on the rebels in June!!

Legal Ombudsman Bill falls short.

2008-03-31T22:50:00.006+01:00

My blog is a little late this week, the consequence of attending a seminar in the beautiful city of Budapest organised by my good friend Joao over the weekend. Unlike many an event the PowerPoint presentations were kept to a minimum and for fun at the event one of the organisers Ozegan entertained us with this you tube video.

Chicken, Chicken, Chicken!!!

Anyhow to more serious stuff. The Legal Services Ombudsman Bill was published today. While it is welcome that the bill has finally been published and the Government are moving towards greater regulation and oversight of the legal profession, I have concerns. We are all familiar with the most recent high profile cases, however over the years many consumers have faced serious obstacles getting redress from their solicitors or barristers in relation to complaints. Consumers have even faced difficulties getting another solicitor to take on their case against a solictor. That has been compounded by the failure of the existing self regulatory bodies, the Law Society and Bar Council to be less than adequate in dealing with complaints brought to them by members of the public. This is of course no surprise, these bodies were set up to advance and represent the interests of solicitors and barristers respectively, to expect them to independently adjudicate on claims, allegations and complaints against their own members is ridiculous. Indeed the old legal maxim that no one should be a judge in their own case, somehow got lost when these regulatory systems were evolving.

I have always been of the belief that not only is this in the interests of consumers, it is also not in the interests of these representative bodies currently engaged in oversight or regulation of their members or profession. Self regulation is an oxymoron as I have said before, that does not serve consumers.

This proposed legislation fails consumers because it will force a person who has a complaint with a solicitor/barrister to go through three processes. Firstly they will have to take up their complaint with the individual solicitor/barrister and try and resolve it there. This of course makes sense for all concerned and the hope would be that most issues can be resolved here. But if they get no joy at this stage they will have to pursue the matter with the representative bodies complaints procedures, and if this fails to meet the needs of the consumer, they can bring the matter to the Legal Services Ombudsman. That might seem all very neat, but for the ordinary consumer who is already stressed out with a particular case/legal issue this could all be very stressful, time consuming and costly. The law and legal system can be intimidating for many individuals, so to force peopel to go through

I believe we should follow the model adopted for financial services where the consumer is required to pursue their case with the individual bank/financial services company and where this fails to meet they can pursue the matter with the Financial Services Ombudsman without having to bring the matter to an intermediatory body.

Why can't we have the same for the legal profession? This is something that CAI will be calling for as the legislation proceeds through the Oireachtas.

Education, education, education?

2008-03-23T20:00:00.008Z

Well Easter in Ireland is usually dominated by religious services, Easter eggs and the teachers conferences. Over the next week, we will hear a lot about teaching and the education system. That got me thinking about the role of education in the consumer movement. While I don't subscribe to the view often promoted by regulators or industry interests that educating consumers is the only or primary way to address a particular issue, consumer education does have a role to play. In many sectors where the law is deficient or where legislators or regulators won't or cannot act, or where retailers or providers are screwing the consumer, education is not really that much use in my humble opinion. Also by just emphasising education, the anti-consumer interests can avoid their responsibilities or try to prevent other actions which they find unpalatable. I am also conscious of the view of the current Minister for Education, Mary Hanafin, who I think said that every time society has an itch, people want the education system to scratch it!

Good Man Pat Shortt!!!

There are three areas where I think consumer education could be advanced (hence the title, which I stole from Tony Blair)

Firstly providing education to consumers directly. I see that the Office of Fair Trading has just completed a pilot of a consumer education course in Scotland which they plan to roll out across the UK. We have seen a significant growth in the number of adult and further education providers here in Ireland and therefore I would love to see the Department of Enterprise, Trade and Employment, the NCA, local VECs and others including CAI sitting down to work on the development of a course designed to meet the needs of consumers in Ireland today. Key aspects would be making sure the content is relevant and up to date, making sure it empowers as well as informs the consumer and lastly is offered and delivered in such a way to reach as many consumers as possible.

Secondly retailers and businesses should be encouraged to engage in consumer education for themselves and their staff. The CAI has run the CAIRS (Consumers' Association of Ireland Retail Staff certificate in consumer customer care) course for businesses in the last number of years to address this particular shortfall. Retailers and businesses would benefit a lot by ensuring all their staff are aware of their obligations to consumers under the law.

Thirdly I think over the coming years that the development of a graduate or third level course on consumer rights is required. If we are ever to build a strong consumer movement, we need to provide consumer activists with the opportunity for intellectual analysis, and with the skills, information and of course qualifications to advance our agenda. I also see the need for such a third level programme to up skill those who have responsibility for consumer protection in a range of state bodies and regulators. Many as far as I can see have no background, training or empathy for consumer issues and it shows!

Time to dump junk food advertising aimed at children

2008-03-15T21:14:00.006Z

March 15th is World Consumer Rights Day, obviously its a date that's a little less known that March 17th both here and abroad. This year the world body of consumer organisations, Consumers International decided to make the campaign against junk food advertising to children the theme for the day. Click here for more information on their international campaign.

I am really pleased that CAI were able to join forces with the Children's Rights Alliance in calling for action in Ireland and in issuing a joint press release. The Alliance represents 80 organisations working to protect and enhance children's' and young people's rights, so our joint statement was a natural coalition. This statement was covered by the Irish Times today.

The tricks used to enhance junk food in ads!!

And this is a big issue. The Taskforce on Obesity which reported in 2005 estimated that there were up to 327,000 children on the island of Ireland who were overweight and obese and that number was estimated to increase by about 11,000 each year. Obesity is putting the lives of children at risk and increasing the incidences of diabetes, heart disease, cancer and premature death. Obviously there are a number of reasons for this, but the aggressive marketing of junk food to children is part of the reason.

One of the key solutions then in my view would be to restrict the advertising of unhealthy foods before the 9pm watershed to provide adequate protection to children here in Ireland. The Broadcasting Commission of Ireland are currently reviewing their Children’s Advertising Code and this presents Ireland with an excellent opportunity to take a lead on this issue. This of course will only deal with advertising from TV stations based here, so to address advertising from other jurisdictions we need the Irish Government to take a leading role at European and global level in calling for the World Health Organisation to introduce an international code on the marketing of unhealthy foods to children, as recommended by Consumers International.

Advertising and marketing are designed to increase sales, no point in doing it if it didn't. In 2003 it was estimated that €132m was spent on advertising food and beverages in Ireland. Processed foods such as chocolate, crisps, fizzy drinks, pre-sugared breakfast cereals and fast food that are high in sugar, fat and salt are the most heavily promoted and marketed in ads even though dietary guidelines recommend they should be eaten the least. Children are primarily the target group for the advertising of these products because of their significant influence on the foods bought by their parents. Advertisers target young children because of the money they have to spend, the influence they have over their parents' spending and the desire to build brand loyalty.
Children, particularly those under 12 are vulnerable to advertising because they are not aware that the purpose of advertising is not to inform, but to persuade and ultimately to sell a product. While parents may ultimately be responsible for feeding their children, the aggressive marketing aimed at their children is undermining their efforts. On one hand parents are encouraging their children to eat healthy food but food company advertising is telling children that unhealthy food products are desirable to eat. A study by the Southern Health Board in 2004 reported in the Taskforce on Obesity found that 75% of parents of 7-8 year olds considered that food advertising promoted unhealthy foods and 50% of parents felt that their children pressurised them to buy certain foods or drinks as a direct result of advertising.

We know of course that the food multinationals and advertising agencies will strongly oppose this, they both make lots of money from selling unhealthy food to children. However its time the Irish Government, EU and WHO put the health and interests of children ahead of the profits of the junk food merchants and their marketing fellow travellers.

Section 149, we need you!!!

2008-03-09T20:50:00.005Z

I do a bit of amateur drama in my spare time, currently practicing with Dunshaughlin players for "I Do Not Like Thee, Dr. Fell" by Bernard Farrell. You don't have to be mad to do drama, but it helps, just like being a consumer advocate in fact.

Anyhow, we did a play last autumn and part of the dialogue involved one character who kept repeating the line "Car 149...where are you?" So much so, it has been imprinted on my mind. Anyhow as a result late last week when I received some documentation from the Department of Finance last week indicating that they were to consider a review of section 149 of the 1995 Consumer Credit Act my first reaction was...."Section 149, we need you"

Well it might sound a bit anoraky...but Section 149 is quite important, this is the section of the legislation which requires banks and financial institutions to seek approval and justify why their fees and charges should be increased. As a result its abolition is top of the bankers wish list. That's no surprise to me, but what I am surprised is that the Government appear to be considering this seriously too. One would have thought with all our problems with increased debt and problems in the housing market, they would have more important things to consider.

The reason this is on the agenda is because the EU institutions have just agreed a new consumer credit directive and the Government here are committed to transposing this new legislation by 2010 and will review the issue later this year. Well I welcome the review of consumer credit legislation, repeal of section 149 is far from welcome.

Those in favour of appealing this say that the new protections such as the Financial Regulator's consumer protection code make this unnecessary. Some also claim it hinders competition. I disagree on both counts.

Competition is not being hindered by section 149, it's the cosy arrangement that banks had here before the arrival of Halifax that hindered competition.

Ten reasons why Section 149 should not be repealed:

1. No evidence to suggest that section 149 has impeded competition, what has impeded competition has been the cosy environment where established banks maintained high costs and charges, which allowed them to be among the most profitable in the developed world. When banks say this is about competition, what they really mean is that there bottom line is suffering, credit is harder to obtain and raising fees and charges is a solution to both these problems.

2. I welcome the entrance of new providers such as Halifax in recent years who have shaken up the market and given consumers a better deal on current accounts, but there is still room for improvement as many of the offers for example of interest on current accounts are time limited.(Halifax being an exception to this)

3. Charges and Fees set out in section 149 are maximum charges, many of the financial institutions are applying much lower charges than those agreed, so again banks don’t have to seek approval to lower charges and fees, only to increase them! Section 149 cannot be characterised as a price control measure, banks and financial institutions are completely free to set interest rates etc, regulators in other sectors of the economy have control and oversight of charges and fees, so financial services is no different from other sectors.

4. Suggestions that Financial Regulator's Consumer Protection Code overrides the need for section 149 is misguided, code has only just been introduced, way to early to judge if it will provide the protection that consumers need.

5. Given the current credit crunch, removal of section 149 would lead in my view to a major increase in charges and fees by banks under pressure to maintain profit margins, removal of section 149 would in fact be a charter for increased charges and fees.

6. Its only a few years since we had major problems with unauthorised over charging by banks, in total the FR has indicated that €168 million was or is owed to Irish consumers by the banks, not all those issues have been sorted out yet, only 80% has been repaid to date, so removing section 149 would send all the wrong signals.

7. It is vital that section 149 is not reviewed in isolation, commitment in Consumer Strategy Group report in 2005 to undertake review of consumer protection performance and role of Financial Regulator in 2008, for me that has to happen first before Section 149 can even be looked at. We cannot remove important provisions of consumer protection legislation in isolation from other matters.

8. I agree with the view of the Consumer Director of the Financial Regulator, Mary O’Dea when she said in 2005 that “We believe that before Section 149 could be removed a number of conditions would need to be met, one of which is that full consideration should be given to the development of a standardised low-cost basic bank account. There appears to be an opportunity here where everyone can gain – low cost, no frills bank accounts would help all consumers, and particularly those on low incomes, and would lead to an environment where legislators could decide that control of these charges might not be warranted. Of course, we’re not at that stage yet, but it is something worth thinking a bit more about.” Mary O’Dea 16th May 2005 at OPEN Conference. Since there is no sign of action by banks to address issue of financial exclusion, would be unwise to abolish section 149.

9. Given the push by the State to encourage people to open bank accounts for social welfare payments, it is important to have oversight and control of charges and fees to protect low income consumers.

10. Sub-prime lenders have just come under remit of FR, major issues there in relation to the exorbitant charges and fees which apply when consumers get into difficulty, I would welcome an urgent review and analysis of these charges and fees and in my view greater oversight rather than less is required.

Dustin Douze Points, Competition Nil Point!

2008-03-01T21:10:00.006Z

Well firstly congrats to Dustin on the great win last Saturday night, I have no doubt he will take Belgrade by storm. On the other hand, competition and consumers took a bit of a battering over the last 10 days and by Euro standards we are not in great shape.

First there was of course Noel Dempsey's decision to shelve competition in Dublin Bus, which is another blow to the hard pressed commuters, who have been waiting years for better services, lower prices and integrated ticketing. The problem with transport services in this country is that they are run and planned to meet the needs of everyone, politicians, managers and unions, all except of course the people this service is supposed to be for...the users, who appear to be an after thought.

Then there was the news (not really news actually as previous CAI surveys for ODCA told us the same thing) that there was limited competition in the groceries sector. The NCA report confirmed that there was little price differential between Tesco and Dunnes Stores, although Aldi and Lidl were much cheaper. While I welcome this survey, I think it has limited value. We have to stop putting the onus on consumers solely to drive change, state agencies like NCA who have a large budget need to be more innovative. I would like NCA to do localised surveys, like a price survey of the main shops in Ashbourne and publish it in the local papers. Now that would grab the local people's attention, but more importantly would grab the attention of the local retailers and traders, no one would want to be the dearest and would help drive and keep prices down.

Dustin douze points!

Also this week the Competition Authority published their 2007 annual report. Now as state agencies go, I think they do a good job. They have produced a number of reports on a range of sectors in the economy where we badly need more competition such as the legal profession, banking, public transport etc. They have managed to shed light on areas of the economy which up to now have been sheltered by uncompetitive practices and vested interests. The problem of course is that they are largely dependent on Government Departments and other state agencies to implement the findings of their reports. According to their own analysis (see page 56-57) the vast majority of these recommendations have not been implemented yet.

We need to inject accountability into the system, so that Government departments and state agencies are required to respond and act within a reasonable period. In the UK they have a system whereby the Government issues a formal response to a report by the Office of Fair Trading. We need something similar here, there may be difficulties with requiring a Government department to respond to a state agency, could create some governance issues. So instead we could require the Competition Authority to report on the response to their recommendation into the relevant Oireachtas committee within 6 months and every 2 years after that, until it is felt the work has been achieved. That would hopefully shame those Government Depts and agencies into action.

I also see that the Office for Fair Trading is for a trial period going to offer rewards for cartel whistelblowers. It will be interesting to see how this goes, but if it works over there it is something CAI will be pursuing here as well.

There is little Ode to Joy for Irish Consumers!!

2008-02-19T08:48:00.008Z

Quelle Surprise! Another report tells us that we are being ripped off compared to our EU counterparts. Forfas published a report last week which reminds us again just how much over the odds we are paying for everything. Well that is all very good, but what we need now is an action plan to actually address the underlying reasons why the cost of living is so high here. We need a co-ordinated Government response to inflation, we need to overhaul the consumer redress system, we need to either reform or if necessary replace the underperforming regulators and we need to take on the vested interests and inject more competition into the economy. And of course I would say this....we need to make sure CAI and others coming from a consumer perspective are at the table when key decisions are being made to ensure the voice of consumers is heard.

Also last week Paul Kelly in the Irish Examiner did an excellent piece on inflation for everyday costs, in particular food. Its shows that flour has gone up 52%, butter up 27%, milk up 22%, eggs up 16% to name a few. While the overall inflation rate has come down to 4.3% (still very high) in January 2008 these everyday costs have skyrocketed, which hits vulnerable consumers on low and fixed incomes the hardest.

Well what can the EU do to address our inflation problem? The single internal market was supposed to bring extra choice and competition. I think we have got the choice, but the competition has been slow to arrive. Yes, large International and European multinationals have come into the Irish market, but in most cases (perhaps Bank of Scotland-Ireland concerning mortgages is an exception to the rule) rather than shake up the market, seeing how cosy and easy it was to overcharge, they nestled into the Irish way of doing things. So as is confirmed by the Forfas report, Irish consumers have not seen much of the benefits of a single market.

Ode to Joy for Irish Consumers?

The debate on Europe will dominate the political agenda in the coming weeks and months. On a personal basis I am pro-EU and will vote yes for the Lisbon Treaty. It would be easy to blame Brussels for the failure of the single market to benefit consumers. Thats not to say that the EU couldn't do more and I do worry about the army of business and corporate lobbyists who descend on the EU institutions every day to press the case of vested interests. However as with environmental and social legislation, some of our more progressive consumer legislation has been driven by the EU and the actions on flight rights and mobile roaming have been welcome.

What we need to see is a commitment by our own Government and the regulatory bodies here to ensure the full benefits of the single market are passed onto consumers, and that unfortunately has been mostly lacking to date.

Going, Going Gone...Consumers patience gone waiting for laws to protect them in property market!

2008-02-10T10:22:00.001Z

Property for Sale, great river view, no basement!

There is a certain pattern to political events and action in Ireland. There is a crisis or media storm, Minister responsible wants to be seen as taking action, so he/she sets up a committee/taskforce to look into it. The group is told to report without delay given the urgency of the matter which they do....and then the findings of of the report remain unimplemented until another crisis/event occurs a number of years later.

And so it is with regulating auctioneers, estate agents, letting agents etc. In 2004 Michael McDowell set up a group to review the sector in light of concerns expressed. It worked very speedily and produced a report in 2005. In the interim the Government set up an implementation group....(I hope you are still with me on this) and last year the National Property Services Regulatory Authority was established on an ad-hoc basis. However as of today it doesn't have any statutory powers, so while it is engaging in preparatory work, it cannot regulate the activities of estate agents and auctioneers and cannot investigate complaints from property buyers and sellers if they arise and where necessary impose sanctions and award compensation.

This delay is unacceptable, in July 2005 the Government promised it would bring in these laws and two and a half years later, the latest information from the Government website suggests that the necessary legislation will not be published until late 2008 and given the time it takes for bills to go through the Oireachtas, it could be 2010 before consumers engaging in property transactions have the rights they badly need. The National Property Services Regulatory Authority which is based in Navan has appointed a CEO, and other staff, I assume, has a budget of almost €1m, but from a consumer prospective is a toothless watchdog.

Given the high home, land and property ownership levels in Ireland, large numbers of consumers are engaging in transactions each year. In particular the purchase of a home is a significant life event and with the large sums of money involved, it is vital that the profession meets the highest standards. While I have no doubt that the majority of estate agents and auctioneers do an excellent job, concerns and problems remain. The main issues for consumers include the misleading guide prices being advertised, inaccurate information about the property being provided, phantom bidders being used to artificially increase prices and blatant conflicts of interests. While the representative bodies such as the IPAV and IAVI can investigate complaints and take some disciplinary actions, they can only act on complaints made against their members. And while the majority are members of these associatons, you don't need to be. And even if they were to kick someone out of their association, they can still practice in the market. And as with all self regulatory bodies the public perception is that these bodies will side “with one of their own” and therefore consumers lack confidence in them and are less likely to complain.

I would also be concerned at the limited requirements for getting an auctioneers licence at present, made worse by the fact that once a licence is obtained there is a total lack of an ongoing supervisory and disciplinary system. It is positive that the NPSRA will have powers to set minimum levels of education and qualificiations for estate agents and auctioneers and will apply fitness and probity criteria.

Its funny that the Government can rush legislation through the Oireachtas when exchequer funding is at stake, but drags it heels on important pieces of legislation like this which are vital to protect consumers. CAI will continue to call on the Department of Justice, Equality and Law Reform to publish the legislation by the summer and to have it passed into law by the end of the year at the latest.

Post Haste....Not!!!

2008-02-03T14:51:00.000Z

The latest survey by Comreg of the opinions of business and residential postal users about postal services here published in recent days makes for depressing reading. When this information is put together with the repeated failure of An Post to meet the targets for next day delivery, surely its time for someone to take responsibility for a service that is not delivery for consumers, pardon the pun! It is ridiculous that a target of 94% for next day delivery of post set by Comreg for An Post a number of years ago continues to be missed by a mile. For the last 5 years, the rate has been in the 63%-79% bracket. I use the post a few times a week and it is really frustrating that sometimes it takes a few days for a letter to get from Dublin to Ashbourne.

I know Royal Mail have had their problems too, but I really like this ad!

I don't blame the postal workers, especially the postmen and women who go out in all weathers to deliver our letters, but the management at the top and in particular the regulator and the Government who have presided over this fiasco. Obviously An Post deliver most of the post in the country, even if on the business side new players have come into the market in recent years. But even with liberalisation, if we allow the current providers to get away with a poor service without any penalties or consequences, well then there is no incentive for improvement. In fact the opposite has happened, Comreg awarded a price increase, with the standard stamp going up from 48c to 55c last March without any commitments on improved service.

You have to plough through it, but on page 39 of the business report it records levels of satisfaction, there are some minor shifts up and down, but overall there are still high levels of dissatisfaction and on page 42 it shows 40% of business customers were unhappy with aspects of postal service. That's an amazing figure.

There were lower levels of dissatisfaction among residential customers, about 10%, but heavy users (those getting or sending more than 14 items a week) dissatisfaction was up to 20%. Of those who made a complaint 34%, only 20% were happy with how it was dealt with, which again is quite a shocking figure.

It's clear from this that with liberalisation approaching we either need incentives for all post providers to improve performance and perhaps price freezes or other sanctions where targets are not met, which result in consumers getting a bad deal.

Many more home owners at debts door in Ireland

2008-01-28T18:03:00.000Z

The Irish housing market after a decade of boom, has been stuttering for over a year now. I just know where I live in Ashbourne, many houses have been on sale for months. The first crack in the market came when Michael McDowell promised in October 2006 that if the Progressive Democrats were re-elected to Government they would reform the stamp duty regime. That was for many people, including myself a good reason to put house buying on hold. As a first time buyer, the prospect of buying without stamp duty and saving €1,000s was very attractive. So almost overnight a market that had been on fire, cooled considerably.

The most recent housing statistics from the Department of the Environment show the amazing decline from 35,000 loan approvals for houses in the second quarter of 2006 to just over 20,000 in the third quarter of 2007. In response to pressure the Government did eventually abolish stamp duty for first time buyers in June 2007 to stimulate the market, but by then the full extent of the American sub-prime crisis became known. And even further reform in Budget 2008 has failed to have the desired effect.

As you can see from this US TV report by CBS, the housing market there is going through a tumultuous time. Of course we have to be concerned about the impact of the sub-prime crisis on the global economy, but I think we also need to be concerned about the thousands of home owners and families who have lost or will lose their homes.

And while it is not as bad here, the number of foreclosures and repossessions is rising as reported in the Irish Independent today, trebling in number since 2004. As reported here, some consumers who were given loans by sub-prime mortgage providers are given very little chance to work their way out of difficulty and are loaded with charges and fees that make repossession the most likely outcome. While sub-prime lenders will now be regulated by the Financial Regulator from Friday next, that would appear to be too late for those who took out mortgages before then. Will the lessons of this disaster be learned, hard to say, but I hope so.

The market is still very slow given that many house hunters in my view believe that house prices are over valued and are waiting for them to fall further. The prices in some areas did come down, I took a chance and bought a house last autumn, the final price I paid was down about 30k. However given how bad the market is, I am surprised that prices have not come down a lot more.

When they do, there is a ready market there as reported last week when a builder slashed the prices for new houses in North Dublin and most of them we bought within hours. The Construction Industry Federation are very quick to lecture the Government on what needs to be done to stimulate the market, however if their members who have made zillions in the last decade were willing to cut prices to reflect the reality in the market, first time buyers may start to buy again. And for me the most important part would be that house prices would become affordable again for many people currently shut out. I have sympathies for private sellers in the second hand house market who are holding on for the best price given that many of them would be in a negative equity situation if they reduced the asking price too much. But the builders and property developer could afford to reduce prices and take some of the pain, but I won't be holding my breath.

Unless prices fall and perhaps interest rates come down significantly I think the housing market will continue to stagnate for all long time, which is bad for those trying to get on the property ladder, bad for those dependent on the housing sector for their employment and income and of course bad for the Government coffers and economy.

Is Yellow Book the answer to our yellow pack customer service culture here?

2008-01-20T17:28:00.000Z

I had the pleasure of spending the New Year holidays with my good friend Didi and his girlfriend Ana in Moscow and in the course of our discussions they were asking me about my new role. I was telling them that apart from high prices here, poor customer service or what we could call "yellow pack" customer service was a big problem. We know from a Eurobarometer survey in 2006 that 35% of Irish consumers were unhappy with the manner in which their complaint was dealt with, and of those almost half didn't take any further again. I imagine in most cases, people were just fobbed off and worn down until they just gave up.

Ana was telling me about the system in Portugal, its called the "Yellow Book". If you have a customer complaint and are not getting anywhere about a public service, retailer, restaurant, bank, basically any goods or service provider you can request the "yellow book". Here is some information on line about the "Livro Amarelo". (I know it is in Portuguese, but if you use an online translation service, it gives you the gist of what it is about). But basically all public authorities/providers are required to have this book by law on the premises, you fill out a form which is in triplicate, one copy for you, one for the provider and one which goes to the public authority responsible for addressing the complaint.

Ana told me that the request for the yellow book doesn't normally go down too well, its almost like an insult and I can imagine why. She has experience of being told that the yellow book has been abolished or that they can't find it. Anyhow in a lot of cases the threat of the consumer looking for the yellow book generally moves the provider to take the complaint more seriously.

It struck me as a potential solution to some of our customer service problems. The reality is that we give consumers rights, but not the means to enforce or at least we make it very difficult for them to seek redress. We go to a bank, shop to restaurant or call a customer care line and we are unhappy about some issue, but cannot seem to get them to take our complaint seriously or sort it out. We are angry and determined to do something about it. But then by the time we find out what to do, where to go and how to do it, we have lost the will to live or do not just have time to sit down and draft that email or letter which may just end up in another black hole. However with the yellow book, you make the complaint there and then on the premises or online, no need to write a letter, spend hours on a so-called customer care line when all the details are fresh in your memory.

Its certainly a system I plan to follow up and look into further. Of course not saying this is a panacea, but the basis of a solution. Lisbon is a very agreeable city and this is an excellent excuse to travel there. It would also address an issue in that the consumer protection landscape is complex, there are a plethora of different systems, agencies, bodies with responsibility for adjudicating on consumer complaints. The yellow book could be the solution in that consumers don't need to know where to go, they just need to fill in the details in the yellow book and the complaint goes to the relevant authority automatically, so if it is about food safety it goes to the Food Safety Authority of Ireland, about financial services, the Financial Ombudsman and so on. That's the theory anyhow, might be worth trying to see if it works in practice here.

Of course you could also take a more extreme route. This guy after months of trying to get a complaint with BT solved uploaded it to You Tube and got the required results. See http://www.youtube.com/watch?v=2O3_NNlUqNE&feature=related

Food for thought.

2008-01-13T19:37:00.000Z

We are all too familiar with the high prices here in Ireland, especially when we compare them with prices when away on holidays in other countries. A survey by Eurostat last year found that food prices here are at least 25% above the European average. Bread and cereals are 21% dearer, meat is 29% more expensive and fruit and vegetables prices are 30% higher.

So what is the hard pressed Irish consumer supposed to do to cut their grocery bills. Well apart from looking at the cost of food, perhaps consumers need to look at what they buy and actually what they eat and throw away. A UK study earlier this year found that households there threw away about a third of all the food they bought.

I know myself when I am in a hurry, I rush around the supermarket to buy one or two items as I have nothing in the house to eat. I forget to write up a shopping list and somehow end up with a lot more than I planned. It seems that many of us are especially fond of those special offers. The 3 chicken breasts for the price of 2 offers, even though we are not sure we need them, they just seem like great value. Five days later in many cases we end up throwing out all that extra stuff out because they have gone past the sell by date. And while many consumers are getting more price sensitive, very few of us are really conscious of the cost of the stuff we throw away. One way to counteract this is to draw up a list of what you need before you go shopping and perhaps also take note of what you throw away. That way you can avoid buying what you don't need and keep track of items you buy but often throw out. Action here is not only good for the pocket, but for the environment too.

Basil the Rat-Fawlty Towers mix version.

Apart from high food costs, consumers are also concerned about food safety, so it was disappointing to hear this week from the FSAI that the number of food safety enforcement orders increased by 54% in 2007. The official health statistics show that a few thousand people suffer from food poisoning each year, although the real figure is probably much higher given many cases go unreported. We also know that some people die as a result of food poisoning, so this is a very serious issue. Many food retailers and businesses operate to very high standards, well beyond the minimum standards set down. However these figures show that there are some who play loose and fast with the health of their customers.

I commend the work of the Food Safety Authority and HSE in investigating and where necessary prosecuting, closing down and naming these food outlets, which not only endanger the health and lives of consumers, but damage the food industry in Ireland. We all laughed at Basil the Rat in Fawlty Towers, buts it not so funny when you get food poisoning.

Government inspired inflation coming to a bus and rail station near you!

2008-01-06T09:33:00.000Z

Well I suppose we are now six days into the New Year, so I should have expected news of Government sanctioned price increases by now. So to prove their efficiency, low and behold along they come, unlike the buses on time every January.

The Sunday Business Post informs us that the Department of Transport (not that there is any mention on their website as of this morning to that effect)has sanctioned fare increases on bus and rail services of up to 10% across the country. This of course is shockingly hypocritical in light of their statements on the need to tackle inflation. On top of these price hikes, many rail commuters are also facing new and increased car parking costs at stations. Recent figures from the CSO showed that more people are driving to work and less travelling on the buses in 2006 compared with 2002 and this price hike will only add to that.

I am reminded of this Fast Show sketch when I think about Government policy on inflaytion!

Public transport costs are one of the key areas where Government has the power to control prices and despite the fact that last June the Government hosted an anti-inflation summit to demonstrate its commitment to keeping pieces and costs down, it has year after year sanctioned increases in public transport fares. But of course, this is all easily explained. The Consumer Strategy Group report in 2005 highlighted the Governments’ conflict of interest, in that it is both the owner and regulator of the CIE group of companies, therefore it has the option of investing more in public transport and keeping costs down or it can pass the increased costs onto the consumer. And of course the latter argument always wins out, that if there is ever any argument of course in the first place.

And speaking of this Anti-Inflation summit when it was convened inflation was 5% and six months on it is still 5%. With the most recent inflation figures from the CSO showing that transport costs were the second largest contributor to inflation after food and drink prices in November 2007, it would have been sensible public policy in relation to reducing inflation, traffic gridlock and CO2 emission to freeze public transport fares. However at the moment, having the Government in charge of tackling inflation is a bit like having Tony Soprano in charge of crime reduction, they may know a lot about it, be responsible for a lot of it and have no interest in but reducing it.

I have to declare an interest, I am a daily Bus Eireann commuter from Ashbourne to Dublin myself. In general the service is good, but the cost is already steep at €5.75 daily return, so another 5-10% on that and I am really beginning to I feel that the Government wants me to go back to my car.

What we need is an independent transport regulator as proposed almost 3 years ago to set prices taking the needs of consumers into account along with increased competition to give consumers greater choice and to keep prices down.

Cowen-Could he become the Darling of Irish Depositors?

2008-01-05T17:22:00.000Z

Yesterday the Chancellor of the Exchequer in the UK, Alistair Darling announced new measures that will increase the levels of protection for bank deposit holders from £35,000 to £50,000. This is in response to the crisis created by the near collapse of the Northern Rock (or Northern Wreck as it soon became known) in September and the sight of thousands of deposit holders queueing to withdraw their savings both in the UK and in Ireland. Thats very good news for savers in the UK, but what about here. The protection available to depositors here now falls well below the level which British consumers are entitled to, which in euro terms is just under €67,000. At present only €20,000 of depositors' savings are guaranteed here.

In October 2007 in response to Dáil questions (questions 98/122 October 16) the Tánaiste rambled on about a review at EU level and a report that will be published on the issue in mid 2008 which bore all the hallmarks of kicking this into touch. Our current scheme meets the minimum levels agreed by the EU member states, but there is no reason why Ireland cannot follow the UK example and greatly enhance the protection which savers have. As far as I am aware this doesn't even require legislation, it only requires amending the existing statutory instrument to reflect the new amounts. Of course there would have to be consultation with the banks who fund the scheme, but I am sure they would welcome anything that would maintain consumers confidence in the banking system and avoid a repeat of the scenes we saw outside Northern Rocks offices last year.

CAI will be writing to Brian Cowen calling on him to increase the levels in line with the UK.

It's expensive to talk in Ireland!

2007-12-31T16:02:00.000Z

Comreg (this is the state body that regulates the communication sector)published a report last this week which showed that Irish consumers generate significantly higher revenue per month compared to consumers across the EU. This report shows that the Average Revenue Per User (ARPU) for mobile phones per month was €44.66 in Ireland. The revenues per user here are way ahead of those in other EU countries, the next is France where the ARPU is €34.33 and the lowest is Germany at €19.15. The EU average is €27 per month.

Claims by the mobile phone industry that Irish consumers pay more because we use and speak more are unfounded on the basis that the French speak more but pay a lot less. We are supposed to have competition with 4 providers now, but it seems that once again the Irish consumer is considered easy picking for companies who it appears charge a lot less in other jurisdictions. I would have thought also that increase penetration, there are now 4.9million mobiles in circulation and with new technology costs should be coming down a lot more. In the January 2006 edition of Consumer Choice it was noted that only 39% of consumers felt they were getting value for money from their mobile network. I am sure not much has changed.

In my capacity as Chair of CAI, I called on Comreg to call in the mobile phone operators and insist on a plan of action to reduce costs to consumers. There is a precedent here in that earlier this year the EU Commission threatened to impose price caps unless mobile phone operators starting reducing the cost of roaming. This is an issue CAI will be following up with Comreg and the Government.

For the record!!!!

2007-12-21T00:55:00.000Z

I am sure many of you like me have spent many a long hour on so-called customer care lines. Some are better than others, but you usually hear at some stage "that this call may be recorded for quality or training purposes" After a rather testing time with a phone company where I got 3 or 4 different stories over the space of a few weeks I was sorry that I hadn't recorded all my telephone conversations with them!!!

That got me thinking, in fact I can, just Google and there are several devices which will record telephone conversations. Also came across this service in the United States. This article appears to indicate that legally such conversations are admissible in Ireland, although I plan to check it out a little further, but interesting information here all the same. I am not sure what the reaction of service providers would be, but in the United States they don't like it, it seems some companies reps hang up when told by the consumer that they too are recording the call for "quality" purposes.

Given the misleading and often contradictory information often given out by phone, recorded calls could be a great source of backup for consumers seeking redress when things go wrong. Imagine being able to play back the tape of a conversation in a hearing of the small claims court to back up your claim!!!

Here is an example of a consumer recording of a series of phonecalls with a debt collection agency from the US

A New Job and New Blog!

2007-12-20T23:08:00.000Z

Hi all, on November 27th last I was elected Chairman of the Consumers's Association of Ireland (CAI). Big task, but I am really looking forward to it. Have a look at our website if you want a bit more information about CAI or want to join, all new members welcome. I am hoping to blog regularly on consumer issues in Ireland from my own perspective. While I am chair of the CAI, the comments and views expressed here will be my own.

Perhaps you are wondering what the hell is a "consumerist". Well it is short hand for "consumer activist". I have been interested in consumer issues for over many years, my journey started off trying to sort out a consumer problem with a car purchase and that led me to the CAI in the first place, where I have been a member for over 10 years.

In that time I have come to realise that the interests of consumers are very much subservient to those of producers, providers, trade unions and other vested interests. Time and time again, vested interests are in there dictating policy in their area of involvement. Given the range of areas, its hard for consumers or consumer organisations to invest the time and money in issues, that a specific trade body such as the Irish Bankers Federation or the Construction Industry Federation can. However, in my view successive Governments have failed to even attempt to address the imbalance in policy making and decision making and some of their policies and decisions could have been produced by the vested interests themselves. I am hoping through my work with CAI to redress that imbalance. Sometimes consumer activism is associated with consumerism, the concept that shopping is the new religion. I am definitely not an adherent to that new faith.

I am in particular interesting in issues affecting vulnerable consumers (those on low/fixed incomes) and in the potential for progressive consumer activism and sustainable consumerism. I know thats sounds a bit heavy, but I hope my posts over the coming period explain it a bit more. Caveat Emptor.