Consumer agency to have enhanced powers

The Government is to establish a National Consumer Agency with enhanced powers to issue fines and to prosecute rogue businesses or traders.

However, the Cabinet has effectively put off until the autumn a decision on whether to abolish the controversial Groceries Order which prevents retailers from selling goods below their wholesale invoice price.

The abolition of the order was one of the key recommendations put forward by the Consumer Strategy Group in its long-awaited report published yesterday. However, the Minister for Enterprise, Micheál Martin, announced that he was establishing a two-month public consultation process on the issue.

The report found that Irish consumers were not getting a fair deal and it proposed reforms in a number of areas, including pubs, pharmacies and transport as well as the retail sector.

It recommended that a new independent National Consumer Agency be established to inform and advocate on behalf of consumers as well as to enforce legislation in this area.

Introducing the report yesterday, Mr Martin said analysis produced by the group, which showed that the price of a range of consumer goods and services in Ireland to be among the most expensive in the euro zone, was "persuasive and compelling".

The chairwoman of the group, Anne Fitzgerald, said that while the term rip-off was emotive, analysis "leads us to conclude that Irish consumers are not getting a fair deal".

She said a study of 20 international branded goods revealed 65 per cent were more expensive here than elsewhere in the euro zone and that there was an overall price difference of 22.3 per cent, excluding VAT.

Ms Fitzgerald said business costs were high in Ireland but were not the highest in the euro zone. She noted corporation tax was lower here.

She said there was a price gap in the grocery sector that could not be explained.

The report maintained that its research showed consumers overwhelmingly believed they were not getting value for money, particularly from pubs, financial services, doctors, dentists and restaurants.

"In summary, consumers in Ireland feel that they are being over-charged, perhaps systematically in very many areas. Most react with passive acceptance believing that there is nothing they can do about it. Many don't know their rights and don't know how to complain effectively. Those that do, lack an effective official channel through which they can voice their concerns and obtain redress," the report states.

Mr Martin said the Government accepted the core recommendation of the group that the consumer agency be established.

The agency would incorporate the existing functions of the Office of the Director of Consumer Affairs but would also have an expanded role and additional statutory functions.

"The report identifies the current lack of consumer advocacy and research as major factors in the ineffectiveness of current consumer policy," Mr Martin said.

The agency would have a statutory function to act as an advocate for the consumer in public debate, in the preparation of legislation and in dealing with regulated industries and individual regulators.

It would also carry out detailed research on all significant consumer issues and "play a pivotal role" in the provision of information to the public.

The agency would be able to impose on-the-spot fines for breaches of consumer law and to bring repeat offenders to court.

"Taking due cognisance of constitutional constraints, the [ agency] should be entrusted with the power to impose fines in cases of clear failure to meet straightforward requirements instead of having to prosecute offenders through the courts."

"To facilitate the [ agency] in the effective exercise of its enforcement powers, the powers of the courts in relation to consumer matters should be extended to enable them to apply closure orders to businesses and rogue traders in flagrant breach of certain consumer protection legislation," the report stated.

Ms Fitzgerald, who is to chair the agency's interim board, called for the immediate lifting of the Groceries Order, which she insisted was not a ban on "below-cost selling".

She said large retailers such as Tesco and Musgraves could negotiate major off-invoice discounts of up to 18 per cent with suppliers but by law these could not be passed on to consumers.

Mr Martin urged those participating in the consultation process to consider how the order could be amended rather than dealing simply with the issues of abolition or retention.