On behalf of the Consumers Association of Ireland we welcome the opportunity to speak to the committee concerning the proposed EU consumer rights directive. Irish consumers engage in millions of consumer contracts every day, some as normal and frequent as buying food in a local shop to significant and infrequent purchases of goods and services, such as kitchen appliances, furniture, a car or a range of other contracts. In the vast majority of cases, there is no problem, but we all have had personal experiences and, as an association, we hear every day of examples where things go wrong and consumers are faced with difficulties and problems and need strong consumer laws to help them get what they paid for or, where that is not possible, to get their hard earned money refunded.
Legislators across the world have long recognised that "caveat emptor” is not sufficient to protect consumers and, as the weaker party in almost all contracts, they need legal protection, a fact recognised in this part of the world as far back as 1893 with the enactment of the Sale of Goods Act of that year. That legislation was revised by the Oireachtas with the Sale of Goods and Supply of Services Act 1980 and enhanced in more recent legislation such as the Consumer Protection Act 2007. This legislation and some existing EU directives give Irish consumers good protection in consumer contracts. That is not to say that everything is perfect and while Irish consumers have in general satisfactory consumer rights, they face difficulties with having those rights applied and enforced. The reality is that Irish consumers encounter some traders and businesses who seek to deny them their legal rights and in some cases the existing means of redress are too costly, slow and ineffective. However that is a debate for another day. As an association we value and want to retain the existing legal rights of consumers in Ireland.
We acknowledge the contribution of the European Union in the area of consumer protection and state that in our view the proposed consumer rights directive contains a number of provisions which are positive for consumers such as the extension of the right of withdrawal, the cooling off period for distance contracts and off premises contracts in Ireland from seven days to 14 days and greater pre-contractual information. Overall, our view is that the proposed directive is flawed and, without significant redrafting, will undermine the existing rights that consumers in Ireland enjoy. We also believe the proposal is contrary to the principle of subsidiarity and unfairly shifts the balance away from the consumer and in favour of the trader.
The proposed directive on consumer rights was published in October 2008 and aims to revise and merge a range of existing directives in areas such as unfair contract terms, consumer sales and guarantees, distance contracts - internet, mail order, telephone - and contracts negotiated away from the business premises such as doorstep selling. The original proposal contained provisions for full harmonisation of consumer law in all aspects. The reality of full harmonisation of consumer law is that the rights of Irish consumers would be reduced. The Commission states that its aim is to strike the right balance between a high level of consumer protection and the competitiveness of enterprises, while ensuring respect for the principle of subsidiarity. The directive does not achieve that balance.
This is not just our view, it is one that is shared by consumer organisations across Europe, BEUC the European consumer organisation, many member state Governments and a large number of MEPs in the European Parliament and political institutions in other member states such as the French Senate. We want to acknowledge that the Irish Government at political and official level also shares some of our concerns. We thank members of the Oireachtas who have raised concerns in Oireachtas debates and through Dáil questions.
The major flaws in the directive are evident in that even now the Commission has indicated that it is willing to move away from the concept of full harmonisation to targeted harmonisation. We also know that members of the European Parliament have tabled almost 2,000 amendments which is a significant number. That indicates that across the political spectrum there is a level of discontent with what is on the table. While many of the proposed amendments are positive, not all are and there is a danger that in the horse trading hard won Irish rights could be lost in a political compromise. Therefore, it is important that the Government and the Oireachtas keeps a close eye on the legislation as it progresses through the EU legislative process.
The first major issue is one of subsidiarity which we believe must be a matter of concern for this committee. The EU Commission is breaching the principle of subsidiarity by proposing full harmonisation in the area of consumer rights. Article 4 of the directive states that:"member states may not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection."
The European Commission appears obsessed with the internal market and furthering cross border trade at all costs. The EU Commission is seeking to undermine important consumer protection rights enacted by the Oireachtas on the unproven premise that it will increase cross border trade. We have no difficulty with traders and businesses operating across borders and many Irish companies are already selling into EU markets. Likewise Irish consumers are buying goods and services in other member states; we are all familiar with the phenomenon of cross border trade on this island. From a consumer point of view it brings further competition and choice and helps to reduce prices. However, the EU Commission has not produced any evidence to suggest that harmonising consumer protection laws across Europe will entice Irish consumers to start buying products in Greece, Finland and other EU member states. Likewise it has produced no evidence to suggest that businesses in Ireland or elsewhere are reluctant to trade in other member states because of different consumer laws. A special EU Barometer report on consumer protection in the internal market found that the key reasons consumers did not buy in other member states related to the fact that they wanted to physically visit a shop or business premises, or were concerned about difficulties with deliveries, the problem of returning items if faulty, lack of trust and concerns about fraud and language difference, for example, if people do not have French, German or other languages and cannot converse with the trader.
That study found that 66% of Irish consumers stated that it will be harder to deal with returns, complaints, price reduction and guarantees in another member state compared with Ireland. The imposition of uniform EU laws which reduce consumer rights here are more likely to depress consumer confidence in cross border trading than to enhance it. Even if this directive is approved, businesses will still be required to adhere to different company laws, tax, VAT and employment laws in the member states in which they wish to trade. There are still many other issues with which they will have to deal and we do not think the change will make a huge difference. In summary, the impact on cross border trade will be minimal; however the negative impact on consumer rights in all the consumer contracts they engage in here at home and in other member states will be negative and will be significant.
The key point for Ireland is that if full harmonisation is adopted, the Oireachtas will effectively lose its right to legislate in the consumer protection area to deal with future consumer needs and market conditions. The Oireachtas must retain its right to legislate above and beyond the provisions in the directive and EU law. As of now many of the directives have the principle of minimum harmonisation where national parliaments are allowed to legislate above what is already in place. Essentially we want a floor under which the rights of consumers will not go below, but we do not want a ceiling which will weaken existing and hard won rights and restrict the Oireachtas from enacting legislation to protect consumers in future.
One of the compromises on the table, from a report of a German parliamentarian, Schwab, is that instead of full harmonisation, member states could pass laws going beyond the provisions of the directive, but that these would be subject to evaluation and approval by the EU Commission every three years. That would be full harmonisation by the back door and would create uncertainty as laws passed here could be later struck down by the European Court of Justice. The proposal for full harmonisation or even the compromise on the table in the European Parliament must be rejected.
I will now hand over to my colleague, Mr. Dermott Jewell, chief executive of the Consumers Association of Ireland, who will deal with some of the specific issues in the directive that are of concern to us.
