Dáil Éireann debate -
Thursday, 18 Apr 1996

Vol. 464 No. 2

Adjournment Debate. - Rates Consultancy Service.

Mrs. O'Rourke

Oldfields set up here and offered a rates consultancy service to businesses from its offices at Eden Quay and Lower Baggot Street in Dublin. The company claimed it could reduce rates' bills for firms and charged £245, plus VAT, in advance for its consultancy service.

At least 5,000 — possibly as many as 7,000 — business people in the Republic paid £300 each in advance to the firm. The Oldfields sales, pitch delivered by innocent young people employed as telesales people for minimum wages, often claimed the company had secured a one-third reduction in rates for some well known company which they would name. For example, the company cited this achievement to the Sunday Business Post in January when it investigated Oldfields. When the newspaper contacted the firm cited by Oldfields, the firm told the Sunday Business Post it had never heard of the company.

Not surprisingly, last month Oldfields abandoned its offices in Dublin in a hurry and left thousands of disgruntled customers in its wake. Most clients of Oldfields are highly critical of the service provided. The promised rates survey never materialised while, for others, their rates actually increased. Only a few hundred appeals were lodged in the Valuation Office in Dublin. Representatives from the Office of Director of Consumer Affairs visited Oldfields on several occasions but found that laws had not been broken.

Oldfields first came to attention in Belfast in January, where it also had an operation. The company may have taken in as many as 1,500 customers in Northern Ireland. However, some of its directors had come to attention prior to this latest saga, one whom is reported to be the subject of a fraud squad investigation in Britain about a controversial timeshare operation.

The Oldfields débâcle is one of the worst examples of sharp practice of which I ever heard. It is beyond belief that such fly-by-night merchants could take in so many people and get away with between £1 million and £1.5 million, possibly a conservative estimate. It is astounding that the company was able to operate within the law despite the obvious concerns expressed by the Director of Consumer Affairs.

This case highlights the necessity for change in company law so that greater powers can be wielded against such conmen. There is also a need for greater scrutiny of those appointed as directors, as some of the people involved in this operation appear to have come to attention in other jurisdictions prior to their "outing" here. Above all, the case highlights the necessity for business people to be on the alert. Irrespective of the laws we introduce, the old maxim of caveat emptor still remains the tried and true adage. Business people should seek advice before paying in advance when unsolicited approaches are made by unknown operators.

I have received calls to suggest that the people behind the Oldfields operation may have resurfaced under another guise elsewhere in Dublin, but that has not been confirmed. Business people should deal with reputable firms, find out their credentials and not part with money in advance of a service. Is it possible to plug a loophole to ensure that such fly-by-night operators cannot hoodwink hard-pressed business people and take off with the proceeds?

Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte)

The Companies Acts, 1963 to 1990, comprise a comprehensive legislative framework governing the incorporation and operation of companies within this jurisdiction. In essence, the aim of this legislation is to provide a necessary framework within which companies can operate and thereby provide those operating companies, and those dealing with them, with a degree of certainty in respect of the manner in which they are to be operated. Certain information in relation to companies is accessible in the Companies Registration Office. This facilitates those dealing with companies to obtain information before deciding to what extent they wish to interact with that company.

It is very important to point out that the companies legislation does not operate to regulate or govern the areas or activities in which companies incorporated under the Acts decide to operate or engage. In so far as this proves necessary, in certain areas — for example in relation to banks, building societies or insurance companies — separate legislation is introduced to govern the specific activities of companies operating in these areas.

I understand Oldfields and Company (Ireland) Limited was incorporated in January 1995. From a company law perspective, nothing in relation to the activities of that company has been brought to my attention. In particular, given that the company was so recently incorporated, its annual returns would only now be falling due for submission to the Companies Registration Office.

As to whether the activities of this company would give rise to the need to amend existing Companies Acts, I should perhaps explain that, as with all legislation, the necessity to keep the law under review and, where necessary, amend it, must always be borne in mind. In this regard, my predecessor the Minister for Finance, Deputy Ruairí Quinn, established a company law review group to examine certain aspects of the Companies Acts which were considered to require examination and possible amendment. The first report of the company law review group was submitted in December 1994 and published by me in February 1995. The report made recommendations for changes to company law in respect of six areas. In publishing the report of the Company Law Review Group, I indicated that I proposed to consider, and where necessary to implement, the recommendations of the group on a phased basis.

In respect of the proposals for the amendment of examinership law, the possibility of amending legislation on this area and also for the removal of the audit for small firms is being contemplated. The other areas covered by the first report of the company law review group will be examined and, where necessary, implementing legislation will be brought forward.

I am not aware of anything arising from the recent press reports in relation to Oldfields and Company (Ireland) Limited that would give rise to the necessity to bring forward proposals to amend the Companies Acts. Having said that, however, if there are lessons to be learned from the Oldfield case I will be more than happy to have then looked at by my officials.

As the Deputy said, the Director of Consumer Affairs was made aware of the practices in this company. Following an initial investigation the director found that no breaches of consumer legislation had occurred and as the traders had entered freely into contracts with the company the issue was primarily one of contract law. I have received a note from the Director of Consumer Affairs about the matter and apparently no contemplated changes in consumer law would deal with this situation; it is a straightforward question of contract law and, as the Deputy said, it is sadly very much a case of caveat emptor. From what I know about the case, I understand why Deputy O'Rourke would want to ventilate it. However, it seems that no action can be taken under company or consumer law. I am not sure if steps can be taken to prevent an occurrence of this case — I am advised that none readily suggests itself — but I will have the matter examined.