Thursday, 18 February 2021
Consumer Protection (Loyalty Penalty and Customer Complaints) Bill 2021: First Stage
That leave be granted to introduce a Bill entitled an Act to prohibit differential pricing in respect of certain subscription service supplied to consumers; to require certain traders to establish schemes for handling consumer complaints in relation to their services and to prescribe minimum standards in relation to such schemes; for those purposes to amend the Consumer Protection Act 2007; and to provide for connected matters.
I thank the Ceann Comhairle for the opportunity to introduce the Bill, which is co-signed by my colleagues Deputies Duncan Smith and Aodhán Ó Ríordáin. It is a timely Bill and deals predominantly with the question of dual pricing, not just in the Irish insurance market but in other economic sectors.
As was exposed by repeated Central Bank reports and other surveys, the practice whereby suppliers charge higher prices to existing customers, who they believe are unlikely to switch to another provider in order to get a better deal, is now what we might describe as endemic in this country. The result is that, in many cases, people who stay with a supplier or service provider end up paying significantly more, even when all other aspects under consideration are equal.
This loyalty penalty affects those who are disadvantaged and older customers who may not have the time, resources or knowledge to navigate complex financial products, and neither should they be expected to switch products constantly in order to get better value for money or a decent service. This should be a given in any modern democracy and regulated economy. Not only are non-switchers being ripped off, they are also indirectly subsidising lower premiums for those regular switchers who are often more financially savvy and better off to begin with.
Evidence from the UK regulator is that, "[T]he loyalty penalty is significant and impacts on many people including those who can least afford it". The UK regulator duly responded by introducing reforms to ban the practice of dual pricing for once and for all, but yet again in Ireland we are lagging behind. The first and immediate provision of the Bill is to outlaw loyalty penalties for services provided to consumers on subscription. Importantly, this would not only apply to insurance policies but also to other sectors such as utilities, broadband, phone contracts and so on.
This area has been the subject of much debate. The Bill will significantly strengthen existing consumer protection legislation and, arguably, enhance it in order to take account of some of the very serious issues that many citizens would have encountered in recent years with particular companies like eir, for example.
As it stands, there is no obligation on service providers to establish a system for handling customer complaints or to abide by their own procedures and commitments if they have such a system in place. That is not sustainable or something anybody in the House would support. Consequently companies like eir, known for shoddy customer service, act with absolute impunity and treat their customers with contempt. There is little or no recourse when a customer has a problem with the customer complaints procedures operated by a subscription service provider. Such companies need to be held accountable for their actions and this Bill will achieve just that.
We should all agree that where systems like these are failing, the State has an obligation and duty to step in to address the serious power imbalances that exist between businesses and their customers and to legislate to protect the interests of citizens. The Bill, in summation, will tip the balance in favour of the ordinary consumer and serve as an important first step in tackling dodgy processes, cowboy companies and rip-off merchants alike.