John Halligan (Waterford, Independent) | Oireachtas source

I am happy to contribute to the debate on this Bill and commend Deputy Niall Collins for bringing it before the House. It is progressive legislation. Although it is not the subject of this debate, I also commend Deputies Catherine Murphy and Róisín Shortall for introducing their Private Members' Bill, the Consumer Rights (Gift Vouchers) Bill 2017.

The main provision of the Bill before the House is a ban on expiry dates of less than five years in gift voucher contracts. The Bill also contains provisions aimed at ensuring consumers will be informed of fees for, or restrictions on the use of, gift vouchers.

Surveys undertaken by the Competition and Consumer Protection Commission have found that half or more of consumers purchase gift vouchers. Many employers also purchase gift vouchers to reward employees. The Bill proposed by Deputy Niall Collins is, therefore, of interest and importance to a very large number of consumers and businesses. Its provision for a minimum term of five years addresses a key aspect of gift voucher contracts. Expiry dates on gift vouchers vary widely from six months to ten years, with the majority being valid for one to two years. In the retail sector expiry dates are typically two years from either the date of purchase or last use. In the travel and hospitality sectors an expiry date of just one year is extremely common.

Research undertaken for the then National Consumer Agency in 2013 found that almost half of those surveyed had reported that they had had a gift voucher that had gone unused. In many cases - I am sure this applies to Deputies in the House also - people had found that they were unable to use a gift voucher because it had expired before they went to use it. This is a situation about which something can and should be done and one which is addressed by Deputy Niall Collins's Bill. Clearly it is wrong that, after an unreasonably short time, consumers should be deprived of the benefit of something for which they, or someone close to them, has paid.

The then Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, proposed in 2015 that expiry dates in gift voucher contracts be prohibited. This proposal formed part of the scheme of a comprehensive, consolidated consumer rights Bill. Owing to the publication of EU legislative proposals later that year which overlapped with two of the four main Parts of the Bill, its subsequent progress has been delayed, but I am glad to be able to say the relevant EU proposals are expected to be adopted in 2019 and that the Government intends to reactivate the Bill at the earliest possible date. In the meantime, the Minister has decided that legislation for the regulation of gift vouchers should not be delayed further. On 12 June the Government gave approval for the priority drafting of the unfair contract terms (gift vouchers) Bill. The proposed Government legislation provides that a trader shall not include in a gift voucher contract a term with an expiry date that is earlier than five years after the date of supply of the gift voucher. Importantly, it also gives the Minister for Business, Enterprise and Innovation power to regulate fees for the issue or replacement of gift vouchers and the so-called dormancy fees that apply to inactive balances on certain gift vouchers after 12 months.

The public consultation process on the scheme of the consumer rights Bill produced a large number of responses on the gift voucher provisions. In particular, businesses that issued gift vouchers expressed concern that a complete ban on expiry dates would unreasonably expose them to indefinite liabilities and give rise to accounting difficulties. While a case can be made in principle that gift vouchers should be redeemable indefinitely, consumer law is about striking a fair balance between the rights given to consumers and the obligations placed on businesses. The Minister, Deputy Heather Humphreys, has taken account of the concerns expressed by businesses and the scheme of the Bill approved by the Government provides, as does Deputy Niall Collins's Bill and that of Deputies Catherine Murphy and Róisín Shortall, that gift vouchers should be valid for a minimum term of five years.

In the Minister’s view, this strikes a reasonable balance between the right of consumers to get what they have paid for and the need of businesses for commercial certainty.

While I am in agreement with the aims of Deputy Collins's Bill, there are a number of issues with the Bill. Expiry dates apart, the other main issue that consumers have with gift vouchers is the fees that apply to some vouchers after 12 months. These inactive balance or dormancy fees range from about €1.40 to €3 a month. This can mean, for example, that a gift voucher for €25 can be rendered worthless after just 20 months, in the same way as if it were subject to an expiry date. The Government is strongly of the view that it is necessary for legislation to deal with the issue of fees as well as expiry dates.

Currently, inactive balance fees apply only to gift cards that can be used to purchase goods or services from a wide range of retailers or service providers, or from retailers and service providers in a specific shopping centre or group of shopping centres, and which constitute electronic money within the meaning of the European Communities (Electronic Money) Regulations 2011. Among other provisions, the regulations provide that an electronic money issuer must, at the request of the electronic money holder, redeem at any time and at par value the monetary value of the electronic money.

While there is a strong argument from a consumer perspective that all gift vouchers should be honoured at their full face value, the providers of electronic money gift cards argue that the costs associated with the provision and management of these products, in particular the requirement to ensure that funds stored on these cards are safeguarded by being stored in segregated bank accounts, require the imposition of fees.

The proposed Government Bill provides accordingly that the Minister for Business, Enterprise and Innovation will have the power to regulate these and other gift voucher fees after undertaking consultations. It is the intention of the Minister, Deputy Humphreys, to undertake a short consultation over the summer months on the issue. The outcome of this consultation will inform the subsequent decisions to be taken on whether to prohibit, reduce, retain or rebalance these fees. The draft scheme approved by Government and the Private Members’ Bill introduced by Deputy Collins both provide for a minimum five-year term for gift vouchers, but they do so in different ways. Deputy Collins's Bill proposes to make terms of less than five years for gift vouchers a prohibited commercial practice under section 55 of the Consumer Protection Act 2007. That Act gives effect to the Unfair Commercial Practices Directive.

As this directive is a full harmonisation measure, providing for the regulation of gift voucher expiry dates as part of a prohibition on commercial practices it runs the risk of legal challenge on the grounds of incompatibility with EU law. In the Government’s proposed Bill, the expiry date provision is framed in terms of a prohibition on contract terms which provide for a duration of less than five years for gift vouchers. As the directive on unfair terms in consumer contracts is a minimum harmonisation instrument, a provision framed in this way does not run a similar risk of legal challenge.

Deputy Collins's Bill also contains provisions to ensure that consumers are informed of fees for, or restrictions on, the use of gift vouchers. These provisions do not take account however of those gift vouchers that may come within the scope of the E-Money Directive, which are subject to the detailed information provisions of that directive and of the Payment Services Directive. As both of these directives are full harmonisation instruments, applying additional information requirements to these gift vouchers would raise issues of compatibility with EU law and would also represent an undesirable form of double regulation. Possible gaps in the application of the information provisions of the Consumer Rights Directive to certain gift voucher contracts would be more appropriately dealt with in the consumer rights Bill, which it is hoped will be reactivated in 2019.

Ireland currently does not have clear rules on the expiry dates of gift vouchers, which time and time again results in needless confusion and frustration for consumers. It is extremely frustrating if a person, or somebody close to them, has paid for a voucher only to be told it is no longer valid a relatively short time afterwards. Some retailers honour vouchers in these instances but others do not. This is simply not fair and needs to change.

The issue of fees is a particular bone of contention for consumers. As I mentioned earlier, in some instances fees of as much as €3 per month apply to gift vouchers after 12 months. Many people are unaware of this and often discover it only when they go to use the voucher and find that they have a greatly reduced balance.

I commend Deputy Niall Collins for initiating this very worthwhile Bill. While there are some technical problems with the Bill, the Government appreciates the spirit in which it has been brought forward and therefore will not oppose the Bill at Second Stage. For too long the waters have been muddied for consumers with greatly varying expiry dates for gift vouchers. The introduction of a minimum five year expiry date will bring certainty to consumers. The issue of dormancy fees reducing the balance on gift vouchers is also a serious cause of irritation for consumers who have bought the voucher in good faith and paid the full cash value. The Government Bill brought forward by the Minister, Deputy Humphreys, will deal comprehensively with both of these issues and will ensure effective protection for consumers.

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