Billy Kelleher (Cork North Central, Fianna Fail)

Unfortunately, I think normal politics have been resumed. Tradition has it that Oppositions propose while Governments reject, but the opposite could equally apply. It is unfortunate that this debate clashes with the budget debate in the Dáil, so it might be overshadowed in terms of the coverage it merits. That is regrettable.

I welcome the opportunity to speak on this Private Members' Bill. The Consumer Protection (Gift Vouchers) Bill 2009 seeks to prohibit the sale of gift vouchers where the period of redemption from the date of sale of the voucher is less than five years. The Bill proposes to achieve this statutory prohibition by way of an amendment to the Consumer Protection Act 2007. Specifically, the Bill proposes to amend section 55 of the Act by adding to the list of prohibited practices the "selling or offering for sale a voucher redeemable for gifts, goods or services which is valid for a period which is less than five years from the date on which the voucher is sold or offered for sale".

By the insertion of this provision, the Bill proposes to make the practice of selling gift vouchers with redemption periods of less than five years illegal, and render those engaging in this practice liable to prosecution under the relevant provisions of the Consumer Protection Act 2007.

While I have some sympathy with the sentiment underlying the Bill, there are several specific reasons I am not in a position to support the Bill. The most prominent of these relates to the provenance of the Consumer Protection Act 2007 and, in particular, Part 3 of the Act, which includes section 55, as it relates to business to consumer commercial practices. Section 55 essentially transposed the EU Directive on Unfair Commercial Practices, or the UCPD as it is commonly referred to, which included a list of 31 commercial practices deemed to be unfair in all circumstances. The UCPD is a maximum harmonised community measure, the implications of which I will deal with later in my address.

Part 3 of the Consumer Protection Act essentially transposed into Irish Law the European Directive No. 2005/29 concerning unfair business-to-consumer commercial practices in the internal market, as agreed by the European Parliament and the Council in May 2005. The promulgation of the Unfair Commercial Practices Directive was one of the most significant consumer protection measures adopted by the EU in recent times. The purpose of the directive is to harmonise the laws of member states with regard to unfair commercial practices, which directly harm the economic interests of consumers.

The directive essentially regulates unfair commercial practices in the Community in several ways. First, it provides for a general prohibition on practices which are contrary to the principle of good faith in a trader's field of activity, or are contrary to the standard of skill that a trader may be reasonably expected to exercise in respect of the consumer. The general prohibition also requires that the practice would be likely to impair the average consumer's ability to make an informed choice about the product or service which the trader is seeking to sell, and also cause the average consumer to make a transactional decision he or she would not otherwise make.

In addition to the overall prohibition, the directive contained general prohibitions on misleading and aggressive commercial practices. In terms of misleading commercial practices, the directive set out various considerations to be taken into account in determining whether a particular commercial practice would be considered to be misleading. The directive also required that the test of impairing the average consumer's ability to make an informed choice and the transactional decision test should be applied concerning the determination of misleading commercial practices.

Similarly, in the case of aggressive commercial practices, the directive prescribed a number of factors to be taken into account in determining whether a particular practice was aggressive, and that such determinations should be subject to the aforementioned average consumer and transactional decision tests.

The directive proscribed a number of specific practices, 31 in total, which were to be considered unfair in all circumstances. This blacklist, which was effectively transposed into law by section 55 of the Consumer Protection Act, essentially relates to practices which were deemed sufficiently egregious as not to require the average consumer and transactional decision tests. Insofar as the 31 specific practices in the blacklist are concerned, they would include particular practices which can seriously disadvantage consumers, such as: representing that a product can cure an illness, when it cannot; representing that a product is able to facilitate winning in games of chance; representing that a trader is a signatory to a code of practice, if he is not; representing that a code of practice has an approval or other endorsement that it does not have; representing that a trader is about to cease trading when he is not; representing that a consumer has won or will win a prize if there actually is no prize; or, if the consumer has to make a payment or incur a loss to claim the prize; failing to comply with a consumer's request to leave the consumer's residence; persistently failing to comply with a consumer's request to cease communicating with or sending unwanted or unsolicited representations to the consumer; and establishing, operating or promoting a pyramid promotional scheme.

While a significant number of the 31 practices proscribed in the directive would most likely have been caught by the provisions of existing Irish consumer protection law, some would not. Accordingly, the transposition of the directive by the enactment of the Consumer Protection Act 2007 provided significant additional protections for Irish consumers against unfair commercial practices.

As I have already advised the House, the key issue concerning the Unfair Commercial Practices Directive is that - unlike previous Community measures in this area, such as the directives on misleading advertising and door-to-door selling, which lay down minimum standards with which member states must comply - the UCPD is a maximum harmonisation measure. Effectively this precludes member states from going beyond the provisions of the directive by adopting additional or more extensive protections within the field harmonised by the directive. In this regard, it is important to note that the list of 31 practices deemed under the directive to be unfair in all instances, is an exhaustive list. It is not open to Ireland to unilaterally add to the list by amending section 55 of the Consumer Protection Act, as is proposed in this Bill.

The only way in which the blacklist can be modified is by way of a revision of the UCPD itself. The directive commits the European Commission to submit a report to the European Parliament and the Council on the application of the UCPD and on any proposals to revise the directive by June 2011. Member states will have an opportunity in this context to make proposals to amend the directive, including its blacklist of prohibited commercial practices.

Though the maximum harmonisation nature of the directive limits the legislative discretion of member states, this limitation must be seen in light of the advantages of harmonisation both for consumers and traders. Consumers benefit from the fact that they can rely on a common set of protections when they make purchases in any member state of the Community, whether on-line or in person. They do not have the burden of trying to establish what protections apply under the national legislation in force in another member state. Traders who wish to sell goods and services in other member states benefit similarly from the fact that a common set of rules applies across all 27 countries. This is a real benefit to a country as reliant on the export of goods and services as Ireland and of particular value to indigenous small and medium-sized enterprises which wish to access markets in other member states but do not have the specialist legal and other resources available to larger firms.

Another aspect of European law which may impinge on this area is the current proposal for an EU directive on consumer rights which was published in October 2008 and is the subject of intensive discussions at the relevant Council working group. In this regard, the House may be aware that I established the sales law review group in November 2008 to report to me on several issues relating to consumer and commercial law, taking into account the implications of the proposed directive for national consumer protection law. The review group's report which was published in June is a thorough, expert analysis of the provisions of the proposed consumer rights directive. The proposed directive will have a major influence on the future of Irish consumer law and it is important that we are in a position to fully understand its provisions and their implications while discussions on the proposal are still ongoing. The review group's report is a substantial input into the Irish response to the proposed directive and its contents have already been of significant benefit to the officials of my Department involved in discussions on the proposal.

Aside from the considerations of European law, I am, as I said, not unsympathetic to the sentiments underlying the Bill and particularly the difficulties consumers can experience when seeking to redeem vouchers they may have bought or received by way of gifts. Undoubtedly, gift vouchers and tokens offer alternative and flexible purchasing and selling channels for consumers and traders. Their popularity, particularly around this time of year, is in no small measure due to their flexible characteristics in that they allow people to purchase goods and services as gifts for recipients who can choose to avail of the goods and services at a time best suited to the recipient. Unfortunately, the prepayment nature inherent in gift vouchers also can bring particular problems for consumers. These problems can range from expiry dates that have lapsed to having a voucher for a shop that has closed down, something which, unfortunately, is more common in the current economic climate.

Senators will be aware that the periods for redeeming vouchers differ from trader to trader. In some instances traders may stipulate that a consumer has up to a specific period from the date of purchase to redeem a voucher and in others traders are more flexible and willing to extend the expiry date, if requested. Often, however, difficulties arise because the purchaser or, more usually, the recipient of the voucher is not aware that the expiry date for the voucher has passed. This can be due to either the expiry date not being particularly transparent in the terms and conditions accompanying the voucher or because no expiry date is stated on the voucher. It could be put in a drawer and forgotten about, and then pulled out later. If a man then wants to take his wife out for a meal and the voucher is found to be out of date, this can be very embarrassing. In so far as the latter situation is concerned, the Consumer Protection Act provides that traders who omit or conceal material information or provide such information in an unclear, unintelligible, ambiguous or untimely manner may be engaging in a misleading commercial practice. Accordingly, consumers who cannot redeem a voucher on the basis of the trader's reliance on the voucher having passed the expiry date, despite the consumer not being informed of any such date, may wish to exercise their rights under the Consumer Protection Act to take an action before the courts on the basis that the trader may have engaged in a misleading commercial practice.

Some commentators have suggested prohibiting traders from imposing redemption periods on gift vouchers or requiring that redemption periods be of a minimum of five or ten years duration. For my part, any suggestion of imposing a statutory obligation that a trader must honour a gift voucher into the future would be problematic and inimical to both the interests of the trader and the purchaser of the voucher. Such an obligation on the trader would effectively amount to an open-ended liability which the trader would have to carry into the future. In the case of the purchaser or recipient of the voucher, the greater the effluxion of time between the purchase and redemption of a voucher the greater the likelihood that the monetary value of the voucher will increasingly erode. If there is an inflationary aspect in the economy, obviously the value of the voucher will diminish over time.

While the Bill is not proposing the abolition of redemption periods for gift vouchers, it is proposing that where a trader does seek to impose such a period when seeking or offering for sale a gift voucher, it must be of a period of not less than five years duration. Again, the imposition of such a lengthy period of redemption may not, for the reasons mentioned, be in the interests of traders, purchasers or recipients of gift vouchers. The interests of all parties would be better served by making the redemption period attaching to a gift voucher as transparent as possible. In this regard, I have requested my officials to examine the issue of transparency with a view to considering the possibility of making regulations under section 50 of the Consumer Protection Act. Such regulations could require that specific information be given on the terms and conditions attaching to the sale or advertisement for sale of gift vouchers, particularly in relation to the redemption periods and conditions attaching to the voucher. The House will be aware that I am preparing legislation to give effect to the Government's decision to merge the National Consumer Agency and the Competition Authority. I have asked my officials to examine the possibility of including specific provisions in this legislation with a view to building on the existing levels of consumer protection in the area of gift vouchers, subject to consistency with EU law.

The House may be aware that the National Consumer Agency has produced a guide to gift vouchers which can be accessed on its website www.consumerconnect.ie. The guide gives valuable advice to consumers on the purchase of gift vouchers, particularly in on issues such as the different types of vouchers and gift cards available in the marketplace; the various expiry or redemption period policies operated by different traders; consumers' rights in relation to partially used vouchers; the importance of keeping vouchers safe; consumers' rights where the trader closes down or there is a change of business; and specific issues in relation to travel agent vouchers. Given the characteristics of gift vouchers, the guide encourages consumers when purchasing vouchers or gift cards to minimise their risk by buying vouchers that can be used at more than one outlet or chain such as shopping centre vouchers or gift tokens issued by trade associations; using a voucher as soon as possible; looking for a gift voucher that has a clear expiry policy; always checking the terms and conditions and taking special account of the expiry date; what happens to any unused portion and whether it can be used in every outlet in a chain.

The agency's overall advice, issued as recently in a public statement as last Friday, 4 December, on gift vouchers is that they should be treated the same as one would treat cash. Consumers contemplating purchasing gift vouchers may wish to consult the agency's on-line guide in order that they are in a position to ensure the value inherent in the voucher can be enjoyed by the recipient. I understand the agency also intends to consider this matter further with a view to possibly issuing guidelines under section 90 of the Consumer Protection Act 2007 to traders on particular commercial practices regarding the sale or advertisement for sale of gift vouchers.

Raising the issue of gift vouchers and the concerns surrounding the manner in which some vouchers are sold and offered for sale is timely in the run-up to the festive period. I have outlined to the House the avenues for redress currently open under consumer law to those who experience difficulties in relation to particular aspects of the sale of gift vouchers. I accept that this is an area that merits further consideration. I have advised the House of the work ongoing in my Department, particularly on the possibility of making regulations prescribing specific consumer information that should accompany the sale of gift vouchers, and also the work being undertaken by the National Consumer Agency. It is my intention to ensure this work continues to progress having regard to developments at national and EU level. I have also outlined to the House the various actions the Government is taking on the issue of gift vouchers. The House will see, therefore, that consumer protection is a matter which the Government takes seriously. I have to ask the Seanad, however, to oppose the Bill, as it is not open to Ireland to unilaterally add to the list of prohibited commercial practices prohibited under the unfair commercial practices directive, given its maximum harmonisation nature.

I thank the Senator for raising this issue. It is timely, given the many people who are purchasing gift vouchers as presents for the festive season. A sizeable number of vouchers are never drawn down, but there cannot be a continuous liability on a trader. There has to be an expiry date. There is an obligation on the recipient to use the voucher in order that a trader will not have an ongoing liability for an indeterminate period. In effect, the longer the duration the greater the likelihood of a voucher being left in a drawer and forgotten about. When a person eventually finds it, he or she may find that the issuing chain has closed down, moved or been taken over. There is an onus on people to inform themselves and to be conscious - this also applies in the context of websites - that the purchase of a gift voucher is essentially a transfer of cash and should be treated as such. People should also read the terms and conditions attached to the purchase of gift vouchers. We encourage companies and businesses providing gift vouchers to ensure consumers are fully aware of the terms and conditions that apply in that regard.

While I am on my feet speaking about gift vouchers, I thank Members in advance for them and wish them all a happy Christmas.