Monday, March 31, 2008

Legal Ombudsman Bill falls short.

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.

Sunday, March 23, 2008

Education, education, education?

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!

Saturday, March 15, 2008

Time to dump junk food advertising aimed at children

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.

Sunday, March 9, 2008

Section 149, we need you!!!

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.

Saturday, March 1, 2008

Dustin Douze Points, Competition Nil Point!

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.