Micheál Martin (Cork South Central, Fianna Fail)

The 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 legislation. It also updates and significantly strengthens the law on pyramid selling.

The Government has identified the development of national policy in the area of consumer protection as a priority for legislative reform. Our aim is to ensure that such policy is fully synchronised with practices in a modern economy.

This Bill implements one of the key recommendations of the Consumer Strategy Group, whose final report, Make Consumers Count — A New Direction for Irish Consumers, was published in May 2005. The 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 the areas of consumer advocacy, research, information, enforcement and education and awareness.

To begin this process without delay, I established the agency on an interim basis in June 2005 and appointed a board and interim chief executive to begin putting in place immediately the infrastructure of the new organisation and building a rapport with consumers. This Bill represents the next logical step towards a fundamental re-focusing of national consumer policy by providing the agency with all the statutory powers and functions it needs to do an effective job on behalf of consumers.

Specifically, the Bill includes provisions allowing the agency to advocate the consumer's case forcefully in public debate. These provisions are designed to ensure that the new agency will be a strong advocate for consumers within the policy-making arena, thereby ensuring that consumer interests are 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.

The agency 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 about their rights and allow them to be more assertive in exercising those rights.

The Bill also 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 also updates and modernises our existing national consumer protection code. A total of nine existing statutes are repealed and replaced, the oldest of which dates back to 1887.

This new body of law will ensure that consumers can have confidence that they will be treated fairly in their commercial dealings with traders and that the relationship between consumers and traders will be based on fairness and respect. To enforce these statutory provisions, the agency will inherit the existing 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 legislation provides for significant penalties for traders found guilty of offences under the Bill. I will deal in detail later with these enforcement provisions. Specifically, however, the Bill will ensure that the national consumer agency has all the necessary powers to enforce actively the statutory protections afforded to consumers and to pursue aggressively 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.

I will now summarise the main provisions of the Consumer Protection Bill. 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. If there are particular issues I fail to mention, I will be happy to expand further on them when replying and I would welcome the contributions of all Senators in that regard.

Within Part 2, section 8 is key because it sets out the agency's functions. The agency will have a general function of promoting consumer welfare and will also be responsible for investigating, enforcing and encouraging compliance with consumer law. The agency is given specific functions relating to advising and making recommendations to the Government and Ministers in respect of any policy or legislative proposal impacting upon consumers. It will be empowered to recommend new legislative proposals to Ministers and will also be entitled to submit recommendations to any other public body regarding any matter impacting on the welfare of consumers. The national consumer agency will also promote the development of alternative dispute resolution procedures as a means of resolving disputes arising out of consumer transactions. Such arrangements are increasingly seen internationally as an alternative to expensive court proceedings. Section 8 also makes the agency responsible for carrying out the functions previously exercised by the Director of Consumer Affairs and which are transferred to it by section 37.

Section 9 allows the Minister to consult the agency in respect of proposals for legislation specifically aimed at consumers. The section obliges it to keep existing consumer protection legislation under review and to submit to the Minister and other Ministers appropriate proposals regarding such legislation.

Sections 10 to 13, inclusive, relate to the appointment of the members and the chairperson of the agency and set out the procedures with regard to meetings of the new national consumer agency. They also provide for the manner in which the agency 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, these sections prohibit a former chief executive from acting as a consultant or taking employment where he or she may be likely to use or disclose information acquired in the performance of his or her functions as chief executive for a period of 12 months after the person ceases to hold the office. 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 that the State and the taxpayer should obtain 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 shall be to facilitate co-operation and avoid of duplication of activities, while simultaneously permitting consultation and the conducting of joint studies and analysis between the agency and those other bodies that are parties to such agreements. However, 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 available to the public. I intend to consult other Ministers before prescribing any other bodies in accordance with these arrangements. However, I envisage that existing sectoral regulators will be among the bodies to be so prescribed.

Section 22 requires the agency to provide the Minister with a copy of its annual report and requires such reports to 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 example, provisions in regard to the disclosure by board members of beneficial interests, 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 in this regard.

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

Among the remaining sections of this Part of the Bill, I draw particular attention to section 35, which allows, among other things, for the transfer 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 following 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, inclusive, 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 moves away from the administration of the new agency. Its main focus is 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 this directive is to harmonise the laws of European Union 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 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 of the Bill introduces a number of new elements to Irish consumer law. Ireland, for example, is one of the few EU member states that do not have a general legislative clause dealing with fair and unfair trading towards consumers. Section 40, which gives effect to a general prohibition of unfair commercial practices, 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 and 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 kind is that it can be used to combat novel commercial practices that are not covered by specific provisions in consumer legislation as well those that are consciously designed by unscrupulous traders to fall outside the scope of such legislation.

Sections 42 to 44, inclusive, prohibit misleading commercial practices. These provisions have some elements in common with those of the Merchandise Marks and Consumer Information Acts on false and misleading trade descriptions and advertising. However, they go further than the existing law by providing a non-exhaustive list of such practices.

Section 45 provides that the omission of material information to consumers is a misleading practice. This is not expressly provided for in existing legislation and is a useful addition to it.

Section 47 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 49 to 51, inclusive, relate to aggressive commercial practices and bring a further new element in our consumer protection law. Aggressive commercial practices are defined as those involving harassment, coercion or undue influence that impair consumers' freedom of choice or conduct 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 these 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 actually impinges on consumer decisions.

Section 52 contains an extensive list of commercial practices that are prohibited in all circumstances. These are not subject to the same 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 to claim a prize, claims that products can cure illnesses where they cannot, false claims that a product or trader have 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 most certainly were not and it is helpful to have them dealt with by means of clear and specific prohibitions.

Sections 54 to 57, 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 section 58 and section 59 that deal with the fixing of maximum prices during a state of emergency affecting the supply of a product, I would like to refer to the extensive range of other price-fixing powers that are being repealed by this Bill. The Prices Acts 1958 to 1972 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 ODCA and the NCA. 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 a wholly ineffective way of restraining prices.

Emergency situations can arise, nevertheless, in which normal competitive forces do not apply and 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 in my view.

Section 59 amends the provision at section 16 of the Prices Act 1958 by providing that orders fixing maximum prices during a state of emergency should be made by the Government and not by the Minister for Enterprise, Trade and Employment. I am doing this to emphasise the exceptional nature of these powers.

Part 4 deals with pyramid schemes. It replaces the Pyramid Selling Act of 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. I see pyramid schemes as an exploitation of human weakness 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 effectively has 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 criminal 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 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 national consumer agency. 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 provides for a number of intermediate steps which may be used before taking legal proceedings against an errant trader.

Section 70 provides that where the agency considers 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 72 similarly provides that when the agency considers that a trader has been engaging 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. Businesses that enter into undertakings with the agency, however, 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 82 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 those traders who breach consumer legislation, therefore, can be a powerful sanction and a compelling incentive to compliance. This is especially so for large businesses for which fines may represent a negligible sanction. Section 79 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 83 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 would like to draw attention is the enhanced provision made for redress for consumers. Section 71 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 others cases 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 79 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 76 maintains the existing 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 in my view 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.

Sections 85 and 86 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 87 allows the agency to issues guidelines to traders and consumers alike in regard to the practicalities of transacting business.

I also alert the House to the fact that I will be introducing a number of mainly technical amendments to the Bill on Committee Stage to tidy up some residual drafting matters. I also propose to introduce some additional powers in regard to product safety and casual trading, two matters of particular concern to consumers.

There is one non-consumer provision in the Bill. Section 93 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 the agencies were acting ultra vires in approving employment grants 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, I am of the view that any potential risk should be closed off by introducing the necessary validating legislation at the earliest opportunity.

The Bill represents a fundamental realignment of national consumer policy by establishing a new agency with much expanded and enhanced powers and creating a forceful new consumer advocate, a role lacking in public debate and policy-making in recent years. The Bill replaces nine existing Acts with a 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.