Ned O'Sullivan (Fianna Fail)
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I welcome the Minister of State at the Department of Justice, Deputy James Browne, to the House to discuss the need to introduce mechanisms to prevent the depreciation in the value of vouchers due to maintenance fees.

Maria Byrne (Fine Gael)
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I thank the Minister of State for coming to the House to discuss this important issue.

In 2018, I voted for the legislation - Senator Ned O'Sullivan was here at the time - covering gift vouchers and expiry dates. People were delighted because some people were losing out on the value of vouchers on the basis that they were only valid for one year and there was no means of extending the validity period. Sometimes companies did not honour vouchers. An example would be where someone named Mary had her second name written on the voucher. The legislation changed all of that, which was very good.At that time, another issue was raised with regard to gift vouchers. I refer to the company One4all and its application of maintenance fees. Where a person does not use a voucher within one year, thereafter One4all applies a maintenance fee of €1.45 per month. I have been contacted by people who live in a small town where there is only one shop that accepts One4all vouchers. These are elderly people who could not use their voucher during the pandemic as they were not going out and somebody else was doing the shopping for them. To use the voucher in other ways, they would have had to go to the city or to another town. They recently discovered that the value of the voucher has depreciated and they have lost quite a bit of money. If someone has a €50 voucher, it falls down behind a heater or whatever and he or she finds it four years later, it will be of no value. This is not acceptable.

Ireland was the first country to regulate in regard to the expiration timeframe for vouchers, which was extended to five years. At that time, the Minister, Deputy Humphreys, wrote to the European Commission, which gave a commitment to review this matter and to consider how the problem could be overcome. I have heard since that some shopping centres and delivery companies are applying a maintenance fee in respect of vouchers not redeemed within a required amount of time. Employers give employees gift vouchers as a means of thanking them or for another particular reason. People should be entitled to the full value of the voucher.

James Browne (Wexford, Fianna Fail)
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I thank Senator Maria Byrne for raising this important issue. According to the Consumer Protection (Gift Vouchers) Act 2019, the term "gift voucher" means any voucher, coupon, document or instrument, including in electronic form, that is intended to be used as a substitute for money in the payment in whole or in part for goods or services, or otherwise exchanged for goods or services. This legislation, which provides requirements in relation to gift voucher contracts, was brought into Irish law in December 2019 by the then Department of Enterprise, Trade or Employment. Many vouchers or gift cards purchased and used today now meet the definition of "electronic money" and are subject to regulation under the European Communities (Electronic Money) Regulations 2011, as amended, commonly referred to as the EMR.

It should be noted that vouchers that are deemed electronic money within the meaning of the EMR are excluded from the Consumer Protection (Gift Vouchers) Act 2019 on the basis that they are already regulated under the EMR. The electronic money directive, which is the directive which the EMR transposed into legislation in Ireland, is a maximum harmonisation directive, meaning that EU countries may not introduce rules that are stricter than those set in the directive. As per regulation 52 of the EMR, electronic money products have to be redeemable at any time and cannot have an expiry date. This is an important measure introduced to enhance consumer protection. In particular, regulated firms must design and sell products that are suitable to their customers needs and are capable of delivering the promised benefits, with key risks and charges with respect to those products appropriately disclosed. Specifically, regulations 74 to 76 of the European Union Payment Services Regulations 2019, PSR, set out the specific requirements regarding the information that is required to be shared by electronic money institutions with payment service users, including in relation to charges. This means that gift card or voucher providers regulated as electronic money providers must inform users of those vouchers of any charges applied.

I have been informed by the Central Bank that while it does not comment on the supervision of specific firms, its expectation is that all regulated firms, including electronic money institutions, comply with their regulatory obligations. The Central Bank also expects regulated firms to take a customer-focused approach and to act in their customers' best interests at all times. This means that firms providing gift cards or vouchers under the EMR must comply with their regulatory obligations and, in this case, they must ensure that consumers are informed of any charges applicable to the voucher they are purchasing and-or using.

It may be useful to know that as part of the European Commission's retail payments strategy, which was launched in September 2020, the Commission has undertaken to align the revised payment services directive, PSD2, and the electronic money directive frameworks by including the issuance of electronic money as a payment service in PSD2. This will ensure greater consistency in the various legislation on retail payments which would include electronic money vouchers and promote robust supervision and oversight of firms in the relevant sectors. This work will be carried out as part of the review of PSD2, which is expected to begin later this year.

Officials in the Department of Finance will consider the issue of reducing balance fees as part of future discussions on the electronic money directive.

Maria Byrne (Fine Gael)
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I thank the Minister of State. I welcome that the Department will consider the issue of reducing balance fees. These companies are regulated by the Central Bank. I understand that they cannot defy what is set in European law, but many people are not aware that the value of their vouchers is being reduced as the information in this regard is in tiny print at the bottom of the voucher. One would need a magnifying glass to read it. Many people are not aware that this has happened until such time as they present their card or voucher and are told that the value of it is less than they expected. That is embarrassing.

I welcome that this matter will be considered by the European Commission. We need to keep the pressure on for proper regulation in this area. As I said, when people give a gift card they expect that the recipient will get the full value of it. I know the companies involved are not breaking the law, but the recipient is not receiving the full value. People are not aware of that. In the meantime, we may need to run an awareness campaign.

James Browne (Wexford, Fianna Fail)
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I again thank Senator Byrne for raising this important issue. We all know people who have been affected in terms of reducing balance fees. It is often only when a person presents a gift card given to him or her by a loved one that he or she realises the value has been reduced to a low amount or, in some cases, zero. It is incumbent that people purchasing vouchers are informed of the application of these fees. On behalf of the Minister for Finance, this issue will be raised with the European Commission in the context of the laws that are being put in place. It is important this is done. Not every voucher scheme applies such fees. In the meantime, I encourage people, when purchasing, to choose a voucher to which no fees are applied. In some cases, these fees are disproportionate, in my view.

I thank the Senator for the opportunity to speak to the House on this issue. This is an important matter for consumers. As stated, there is legislation in place in Ireland that ensures that these consumers are protected. Firms that are providing gift cards or vouchers under electronic money regulations must comply with their regulatory obligations. In this case, they must ensure consumers are informed of any fees or charges applicable to the vouchers they are purchasing and-or using. As correctly point out by Senator Maria Byrne, in some cases this information is in very small print. Companies have a duty to ensure the information they are providing is accessible and readable, as I understand the law on the matter. In addition, developments are under way at EU and domestic level to enhance the existing electronic money framework in order to align it with more stringent legislation such as the revised payment services directive.