Micheál Martin (Cork South Central, Fianna Fail)

I move: "That the Bill be now read a Second Time."

The development of national policy in the area of consumer protection has been identified by the Government as a priority for legislative reform. Our aim is to ensure such policy reflects the trading methods and practices of a modern economy and the law is updated and strengthened accordingly. In fulfilment of these aims the Consumer Protection Bill provides for the establishment on a statutory basis of the National Consumer Agency, the transposition into national law of the unfair commercial practices directive and the rationalisation and updating of the existing body of consumer law. It also updates and significantly strengthens the law on pyramid selling.

The Consumer Strategy Group was strongly of the view that a new agency should be established with a robust and expanded mandate to protect consumer welfare and represent the interests of consumers. The group recommended that the new agency should have specific statutory functions in areas of consumer advocacy, research, information, enforcement and education and awareness. All these functions are provided for in the Bill.

Following publication of the group's final report in May 2005, I established the agency on an interim basis in June 2005 and appointed a board and interim executive chairperson to immediately begin putting in place the infrastructure of the new organisation. Owing to this immediate response, the agency will be in a position to hit the ground running when the Bill is enacted following its passage through the Oireachtas.

The Bill includes provisions allowing the new agency to be a forceful advocate of the consumer's case in public debate. These provisions are designed to ensure the new agency will represent consumer interests within the policy making arena, thereby ensuring that the promotion of consumer welfare is brought to the forefront of the national agenda.

The agency shall also conduct, commission and publish research on consumer issues. This reflects the strong view of the Consumer Strategy Group that well-founded research is an essential prerequisite to enable the agency to act as a vigorous advocate for consumers. By being well informed, the agency will be in a position to debate issues from a position of strength. It will also promote public awareness, conduct public information campaigns and promote educational activities and initiatives. The aim and intention behind this shift in consumer policy is to empower consumers, make them better informed as to their rights and allow them to be more assertive in exercising those rights.

The Bill incorporates important statutory protections for consumers by outlawing a wide range of unfair, misleading and aggressive commercial practices. In this respect, the Bill transposes the European Union's unfair commercial practices directive and updates and modernises our existing national consumer protection code. A total of nine consumer statutes are repealed and replaced, the oldest of which dates back to 1887.

This new body of law will ensure consumers can have confidence that they will be treated fairly in their commercial dealings with traders and the relationship between consumers and traders will be based on fairness and respect. To enforce these statutory provisions the agency will inherit the enforcement functions of the Director of Consumer Affairs but will also be armed with a number of additional and novel enforcement options. In addition, the Bill provides for significant penalties for traders found guilty of offences under the Bill. I will deal with these enforcement provisions in detail in a few moments.

Specifically, the Bill will ensure the National Consumer Agency has all necessary powers to actively enforce the statutory protections afforded consumers and aggressively pursue those traders who do not comply with their obligations. The Bill further provides specific protections for persons who report offences to the National Consumer Agency.

Before summarising the main provisions of the Consumer Protection Bill, I pay tribute to the work of the Office of the Director of Consumer Affairs over a period of almost 30 years. It has had an almost exclusively enforcement based function and consumers have much cause to be thankful for the protection afforded by the office over those years. The experience and expertise built up over that time will not be lost but will transfer to the National Consumer Agency and become part of the much expanded remit of the new organisation.

In regard to the text of the legislation I would be pleased to expand further on any particular aspect of the Bill in replying to this debate and I welcome the contribution of all Members of the House in that regard. Part 2 provides for the establishment of the new National Consumer Agency. Many of the provisions of this Part impose standard corporate governance type powers, duties and obligations on the agency and its staff. Within this Part, section 8, which sets out the agency's functions, is key. The agency will have a general function of promoting consumer welfare and will be responsible for investigating, enforcing and encouraging compliance with consumer law.

The agency is given specific functions in advising and making recommendations to the Government and Ministers on any policy or legislative proposal impacting upon consumers. It is empowered to recommend new legislative proposals to Ministers and will be entitled to submit recommendations to any other public body regarding any matter impacting on the welfare of consumers. A statutory power of this sort is important in ensuring that the views of the agency are afforded the status they deserve in the policy making process.

The National Consumer Agency will promote the development of alternative dispute resolution procedures as a means of resolving disputes arising out of consumer transactions. Increasingly, such arrangements are seen internationally as an alternative to expensive court proceedings. The section also makes the agency responsible for carrying out the functions previously exercised by the Director of Consumer Affairs and transferred to the agency by section 37.

Section 9 allows the Minister to consult the agency on proposals for legislation aimed specifically at consumers. This section obliges the agency to keep existing consumer protection legislation under review and to submit to the Minister and other Ministers appropriate proposals in regard to such legislation.

Sections 10 to 13, inclusive, relate to the appointment of the members and chairperson of the agency and set out the procedures in regard to meetings of the agency and the manner in which it shall carry out its business. Sections 14 to 17, inclusive, provide for the appointment and certain terms and conditions of employment of the chief executive officer of the agency. For example, the section prohibits a former chief executive, for a period of 12 months after he or she ceases to be chief executive, from acting as a consultant or taking employment where he or she is likely to use or disclose information acquired in the performance of his or her functions as chief executive. The chief executive will be obliged to give evidence before Oireachtas committees.

Section 20 obliges the agency periodically to prepare and submit to the Minister strategy statements and annual work programmes. It is critical the State and the taxpayer attain maximum value for money from the resources employed in protecting consumer interests. Thus, section 21 provides that the agency shall enter into co-operation agreements with other public bodies to be prescribed by the Minister. The purpose of such agreements is to facilitate co-operation and avoid duplication of activities while at the same time permitting consultation and joint studies and analysis involving the agency and those other bodies that are parties to such agreements.

The inclusion of these provisions will also enable the agency to provide a strong consumer voice to complement the work of the various sectoral regulators and to question their decisions if they are seen to act against the interests of consumers. Copies of co-operation agreements must be made available to the public. I intend to consult other Ministers before prescribing any other bodies in accordance with these arrangements, but I envisage that existing sectoral regulators will be among the bodies so prescribed.

Section 22 requires the agency to provide the Minister with a copy of its annual report and that such reports be laid before the Houses of the Oireachtas. Section 23 obliges the agency to keep proper accounts and to submit its accounts for audit to the Comptroller and Auditor General. Copies of the accounts and of the Comptroller and Auditor General's report shall be presented to the Minister, who shall lay copies of them before the Houses of the Oireachtas.

Sections 25 to 29, inclusive, provide important administrative powers and obligations in regard to the staffing of the agency and the conduct by it of its business. This includes, for instance, provisions in regard to the disclosure by board members of beneficial interests, and the power of the agency to recruit consultants, have a seal of office and borrow money.

Section 30 provides that the agency may appoint authorised officers for enforcement purposes. Authorised officers employed by the Office of the Director of Consumer Affairs who were appointed under the Consumer Information Act 1978 will be transferred to the new agency. The section sets out the powers of authorised officers to enter, inspect and search premises in investigating alleged breaches of the Bill. Officers may be accompanied by members of the Garda Síochána when engaged in such enforcement activities.

Sections 31 and 32 relate to the circumstances in which confidential information, including information relating to the commission of offences, may or may not be disclosed by the agency. The agency is, for example, permitted to disclose such information to, and receive such information from, certain prescribed bodies, including other enforcement agencies.

Section 35 allows for the transfer to the agency of existing staff of the Office of the Director of Consumer Affairs. These staff are currently civil servants employed by the Department of Enterprise, Trade and Employment. At any time within 24 months after the establishment of the agency, they may opt to return to the Department and preserve their Civil Service status. There will be no change to their terms or conditions of employment.

Sections 37 to 39 provide for the effective transfer of functions, property and agreements vested in the Director of Consumer Affairs to the agency on establishment day. This will allow for the smooth transition from one public body to another without any interruption in the public services provided.

Part 3 of the Bill focuses on prohibiting a wide range of unfair, misleading or aggressive trading practices. This part also transposes the EU's unfair commercial practices directive. The aim of the directive is to harmonise the laws of EU member states and provide a high level of consumer protection. Consumers will enjoy similar levels of protection for purchases made throughout the European Union, while business will benefit from having a common framework of rules instead of a host of disparate national regulations. Studies undertaken by the European Commission show that Irish consumers make higher levels of cross-border purchases and that Irish business has higher levels of cross-border sales than the European Union average. The harmonisation effected by the directive will, therefore, benefit both consumers and business in Ireland.

This part introduces several new elements to Irish consumer law. Ireland, for example, is one of the few EU member states that does not have a general legislative clause dealing with fair and unfair trading towards consumers. Section 41, which gives effect to the general prohibition of unfair commercial practices contained in the directive, fills this gap in our consumer protection code. It provides that a commercial practice is unfair where it is contrary to the general principle of good faith in the trader's field of activity or the standard of skill and care that a trader could reasonably be expected to exercise towards consumers. The main advantage of a general clause of this type is that it can be used to combat novel commercial practices that are not covered by specific provisions in consumer legislation as well as practices that are consciously designed by unscrupulous traders to fall outside the scope of such legislation.

Sections 42 to 45, inclusive, prohibit misleading commercial practices. These provisions have some elements in common with the provisions of the Merchandise Marks and Consumer Information Acts on false and misleading trade descriptions and advertising but are broader in scope. The sale of a house or other property, for instance, is outside the scope of existing domestic consumer law but is included in this Bill.

Section 46 provides that the omission of material information to consumers is a misleading practice. This is not expressly provided for in our current legislation and is a useful addition. Section 48 allows the Minister to make consumer information regulations to specify certain information that should be provided to consumers in specified transactions. The section is broadly similar to the provisions of the Consumer Information Act on marking and advertising orders.

Sections 50 to 52, inclusive, relate to aggressive commercial practices and bring a further new element in our consumer protection law. Aggressive commercial practices are defined as practices involving harassment, coercion or undue influence that impair consumers' freedom of choice and affect their purchasing decisions. They include pressure sales tactics that seek to intimidate or coerce consumers, and practices that seek to take advantage of consumers who are vulnerable by virtue of misfortune or circumstance.

The practices described in the foregoing sections are prohibited only in circumstances where they would be likely to cause the average consumer to make a transactional decision that he or she would not otherwise make. The intention behind this test is that a practice should not be regarded as unfair, misleading or aggressive unless it impinges on consumer decisions.

Section 53 contains an extensive list of commercial practices that are prohibited in all circumstances. These are not subject to the same transactional decision test on the basis that they are deemed of their nature to impair consumer decision making in all cases. These practices include prize promotions where there is either no prize or consumers must make a payment in order to claim a prize, false claims that products can cure illnesses, false claims that a product or trader has an endorsement or authorisation or that a trader is about to cease trading or move premises, and persistent unwanted cold calling. While some of these practices might well have been covered by the provisions in our existing legislation, others possibly were not. It is helpful to have them dealt with by means of clear and specific prohibitions.

Sections 55 to 58, inclusive, relate to price display regulations, the provision of weighing facilities in grocery retail outlets and the prevention of persons from reading prices. These provisions are based on provisions in existing domestic consumer legislation which still have a useful role to play.

Before discussing sections 59 and 60, which deal with the fixing of maximum prices during a state of emergency affecting the supply of a product, I will refer to the extensive range of other price-fixing powers being repealed by this Bill. The Prices Acts 1958-72 confer seven separate powers on the Minister for Enterprise, Trade and Employment to fix maximum prices. The only one of these that is being retained is that dealing with emergency situations. The Consumer Strategy Group recommended the repeal of the price control provisions of the Prices Acts, and this view is supported by the Competition Authority, the Office of the Director of Consumer Affairs, and the National Consumer Agency.

Our experience with price controls, particularly in the period from the mid-1970s to the mid-1980s when extensive recourse was had to them, strongly supports the view that they are an entirely ineffective way of restraining prices. Emergency situations can arise, nevertheless, in which normal competitive forces do not apply. It is prudent to make provision for such circumstances. Factors such as the volatility of oil supplies, the increased likelihood of extreme weather events and the lengthening of supply chains for many products underline the need for such a provision.

Section 60 amends the provision at section 16 of the Prices Act 1958 by providing that orders fixing maximum prices during such a state of emergency should be made by the Government and not by the Minister for Enterprise, Trade and Employment. I include this provision to emphasise the exceptional nature of these powers.

Part 4 deals with pyramid schemes. It replaces the Pyramid Selling Act 1980, which has proved ineffective in dealing with modern manifestations of pyramid selling. It also expands considerably on the relatively brief provision on pyramid schemes in the Unfair Commercial Practices Directive. It prohibits participation in pyramid schemes as well as the establishment, operation or promotion of such schemes. It also seeks to close off the loopholes in the existing law that the promoters of these schemes have exploited by, among other things, seeking to depict payments to the schemes as "gifts".

The penalties for offences relating to pyramid schemes are also being increased to a fine of up to €150,000 and a prison term of up to five years. Pyramid schemes are insidious and exploitative and I am determined that the law should take a tough approach to those who promote and participate in them.

Part 5 deals with civil and criminal enforcement. Under existing law, the Director of Consumer Affairs has effectively just two ways of getting businesses to comply with their legal obligations. The director could use his or her influence to seek voluntary compliance from traders or could take legal proceedings against them. Although the Act gave the director power to seek an injunction against misleading practices, such injunctions could only be obtained in the High Court, a factor which made them a difficult option in the great majority of cases.

The efforts of successive directors and their staff to secure voluntary compliance with consumer legislation have achieved a great deal over the years and will continue to be an important part of the work of the NCA. Modern regulatory thinking, however, emphasises the need to provide enforcement bodies with a wide and flexible range of powers and sanctions to secure compliance with the law and, where necessary, to ensure that those who flout it are dealt with firmly and effectively. Thus the Bill makes provision for a number of intermediate steps, which may be used before taking legal proceedings against an errant trader.

Section 71 provides that where the agency considers that there is a case for seeking an injunction or prohibition order against a trader in respect of a prohibited act or practice, it will have the option of accepting a written undertaking from that trader containing whatever terms and conditions the agency considers appropriate in the circumstances. If the trader subsequently fails to comply with the terms of the undertaking, the agency may then apply for a prohibition order.

Section 73 similarly provides that when the agency considers that a trader has engaged in prohibited activity, it will have the option of serving a compliance notice on the trader concerned directing him or her to remedy the prohibited act or practice. If the trader does not appeal the notice, it takes effect within a specified period. Failure by a trader to comply with the terms of a compliance notice is an offence and may lead to the taking of criminal proceedings against him or her.

These provisions have clear advantages for the agency, which will have new options for dealing with traders where costly and time-consuming recourse to the courts may not be necessary. It has advantages for traders who are given the opportunity and incentive to correct their behaviour and comply with their obligations without having to face court proceedings. However, businesses that enter into undertakings with the agency, or accept compliance notices served by it, and then proceed to ignore the terms of those undertakings or notices will face legal proceedings and whatever sanctions may result from those proceedings.

Section 83 will permit the agency to impose on-the-spot fines on traders for offences relating to price display. This is in line with a recommendation of the consumer strategy group and again reflects the view that, where it is practicable to secure effective enforcement of consumer law by means other than going to court, this should be done.

Many businesses spend a great deal of money building a reputation for themselves and their products. Bringing to public attention the names of traders who breach consumer legislation can, therefore, be a powerful sanction and a compelling incentive to compliance. This is particularly so for large businesses for which fines may represent a negligible sanction. Thus, section 80 permits a court, on the application of the agency, to require a trader convicted of a number of specified offences to publish, at his or her expense, a corrective statement in respect of the facts relating to the offence.

Section 84 requires the agency to maintain a list of traders convicted of criminal offences, subject to court orders, giving an undertaking, served with a compliance notice, or subject to a fixed payment notice and to publish this list at any time and in any form it considers appropriate.

A further element of this part of the Bill to which I draw attention is the enhanced provision made for redress for consumers. Section 72 gives consumers aggrieved by a prohibited act or practice a right of action for relief by way of damages against the trader who has committed the act or practice in question. In some cases, it is sufficient that a practice detrimental to consumers is halted whether as a result of civil or criminal proceedings. In cases, however, where consumers have suffered loss or damage as a result of such an act or practice, it is right that they should have an opportunity to seek redress for that loss or damage.

Section 80, to which I have already referred, further permits a court to require a trader convicted of an offence under the Act to pay appropriate compensation to a consumer who has suffered loss or damage as a result of the offence. Such a compensation order may be instead of, or in addition to, any fine or penalty the court may impose on the trader.

Part 5 provides for tougher penalties, particularly for repeat offenders. Section 77 maintains the maximum fine of €3,000 for summary convictions and €60,000 for convictions on indictment. However, the section also provides for a maximum fine of €5,000 for a subsequent summary conviction for the same offence and of €100,000 for a subsequent conviction on indictment.

The section also provides for additional penalties for continuing contraventions by persons convicted of offences. It is right to penalise more heavily those traders who repeatedly breach the law. A substantial part of the overall detriment suffered by consumers, results from the activities of a small number of hard-core transgressors and these should be a particular target of enforcement action.

Part 6 introduces a number of miscellaneous provisions. Section 85 provides protection to people who report breaches to the agency and is, in effect, a whistleblower clause. Sections 86 and 87 give recognition to codes of practice drawn up by traders or groups of traders, allow the agency to approve such codes and for the provisions of a code to be admissible in court proceedings. Section 88 allows the agency to issue guidelines to traders and consumers alike in regard to the practicality of transacting business.

There is one non-consumer provision in the Bill. Section 94 amends the Industrial Development Act 1993 to give retrospective effect to an assignment of powers made by Forfás to IDA Ireland and Enterprise Ireland on 26 May 2006. The assignment of powers is being made retrospective to 25 July 2003, the date the Industrial Development (Science Foundation Ireland) Act 2003 came into effect.

This provision is necessary because the 2003 Act consolidated provisions dealing with employment grants that had been included in the 1986, 1991 and 1993 Acts. As a consequence, a new assignment of powers to the agencies to make employment grants under section 25 of the 2003 Act was necessary. However, this assignment was not made until 26 May 2006, with the result that the agencies were acting ultra vires in approving employment grants in the period between 25 July 2003 when the 2003 Act was commenced and 26 May 2006. The Attorney General has advised that primary legislation is necessary to make the assignment of powers retrospective to 25 July 2003. While any potential financial liability arising for the State on foot of the delay in assigning the powers is judged to be minimal, any potential risk should be closed off by introducing the necessary validating legislation at the earliest opportunity.

Section 95 amends the Casual Trading Act 1995 to allow the Minister to introduce statutory guidelines for local authorities in regard to the issuing of casual trading licences. The consumer strategy group was strongly of the view that a lack of consistency on the part of local authorities in this regard significantly inhibited the growth of casual trading thereby effectively restricting consumer choice. The group specifically recommended in its report that the Minister should be empowered to issue statutory guidelines obliging local authorities to apply a consistent approach when granting casual trading licences.

The Department issued non-statutory guidelines on this matter to local authorities in July 2005 and again in July 2006 with a view to their being implemented on a voluntary basis. Should it be that the voluntary guidelines do not bring about a more consistent approach by local authorities, I will use the powers proposed in this amendment to make the necessary regulations to introduce statutory guidelines in this area.

Section 96 amends the Hallmarking Act of 1981 to take account of the repeal of the Merchandise Marks Act 1887. Sections 97 and 98 provide important additional powers to the agency in the enforcement of product safety regulations. They will allow it to request the customs authorities to detain products until their conformity with product safety rules can be determined. The changes will also facilitate admissibility of laboratory tests carried out in other jurisdictions.

I will introduce a number of amendments on Committee Stage. These will be mainly of a technical nature, although others will serve to strengthen the protections afforded to consumers under the Bill. Principal among these will be a group of amendments to provide a role for the Financial Regulator in enforcing the provisions of the Bill in the financial services sector. The provisions of this Bill apply to all sectors of the economy and offer protection to consumers whether they are buying a loaf of bread or taking out a mortgage with their local bank.

Deputies will be aware of the role of the Financial Regulator in protecting the interests of consumers in their dealings with the financial services industry. As the regulator has particular expertise in the sector, it is not reasonable to expect it should be replicated within the National Consumer Agency. Traders in the financial services sector are subject to an administrative sanctions regime that includes the role of the Financial Services Ombudsman. The ombudsman is an independent statutory complaints officer with power to award compensation to consumers who suffer damage as a result of their dealing with regulated financial services providers. It is prudent to ensure that the prohibitions contained in the Consumer Protection Bill are brought within that regime in so far as the financial services sector is concerned.

Bearing in mind what I have said, I have decided in consultation with the Minister for Finance that it would be prudent to provide that the Financial Regulator should have parallel powers to the agency when it comes to enforcing, in the financial services sector, the prohibitions on unfair commercial practices as set out in the Bill. The co-operation agreement between the agency and the regulator will ensure proper consultation and transparency in the exercise by the two regulators of their respective powers in that regard.

I will also introduce provisions to prohibit discrimination against consumers on grounds of method of payment and to allow the National Consumer Agency to promote quality assurance schemes among traders. These provisions arose from proposals by Senators Cox and Coghlan in the Seanad and I will table amendments on Committee Stage in this House. I will also further strengthen the powers of the agency in the area of product safety.

The Bill represents a fundamental realignment of national consumer policy by establishing a new agency with much expanded and enhanced powers and in effect creating a forceful new consumer advocate, which has been lacking in public debate and policy making in recent years. Furthermore, the Bill replaces nine existing pieces of primary legislation with this single statute. This represents a significant gain in the accessibility and transparency of our consumer protection code and one that I am determined to extend to the remaining areas of that code. I commend the Bill to the House.

See this speech in context