Select Committee on Enterprise and Economic Strategy díospóireacht -
Wednesday, 6 Jul 1994

SECTION 23.

Mr. Cullen

I move amendment No. 95:

In page 22, between lines 19 and 20, to insert the following subsection:

"(3) The provisions of subsection (1) shall not prohibit the publication of an advertisment which states in general terms that credit terms are available."

I wish to clarify the type of advertisements covered by the section. I am not sure if the wording of my colleague's amendment gets across the point I wish to make. Will a general newspaper advertisement — such as one advertising caravans and cars or trailers for sale, credit available — have to comply with the provisions in the section? I accept that a specific advertisement covering the make, model and year of a car would need to comply with the provisions of the section but do the provisions need to be complied with when one advertises a range of cars for sale and credit available? This type of general advertising is important in some areas of the industry.

Mr. R. Bruton

Many people display a notice in shop windows indicating that credit is available and it would be difficult for them to comply with the provisions in the section. Why is there not a reference in the section to the APR, over which we have laboured for so long?

Chairman

The Deputy must confine his comments to the section under discussion.

Mrs. O'Rourke

I did not understand the amendment as printed; the Deputy has indicated its intent is slightly different to the amendment as worded. If a person selling a job lot of cars merely wishes to inform the general public there are 100 cars for sale, a member of the public who goes to the compound to view the cars will be able to discern the prices of the cars. That point was not discernible in the amendment as worded.

Mr. Cullen

I highlighted that caveat when I moved the amendment.

Mrs. O'Rourke

The reasonable case made by the Deputy would be in conflict with the provisions of the Bill. The Bill seeks to ensure maximum transparency. It is essential that the consumers about to enter into a credit agreement should have full information. What the Deputy is saying is that the consumer would then be entering into a specific agreement not in a general sense but in a particular sense. If I accepted that — and the Deputy has put the amendment differently to my reading of it — I would be providing a loophole whereby advertisers of credit could avoid giving in their advertisements information other than a statement in general terms.

Consumers are gullible and an announcement of the sale of 40 cars and the provision of credit has an allure. By the time the consumers are in the hands of the disreputable person who is selling, the allure will have done its trick and have led them to the point of sale, albeit that sale will then be correctly conducted. Surely what we are doing is taking away the allure so that the consumer goes about the business with his eyes open.

Mr. Cullen

I take the Minister's point. The only way I see the problem being overcome is by providing not for the acquisition of goods or provision of a service but for specified goods or a specified service. I have a reservation about using the example of cars because there are all kinds of connotations, but take a reputable car dealer who holds a number of reputable dealerships from major manufacturers. His marketing point is his company name as opposed to the brands he is selling. The easiest example is a dealer who sells Volkswagens, Mazdas and Audis. Each company might have different credit terms and different arrangements. It would be impossible in that case to run an advertisement and bring in all the terms the Minister requires. If he wants to advertise the sale of Audis, I agree he should be quite specific as to the terms as they relate to that particular car. However, he will not be able to run a smaller version of the advertisement to the effect that he has cars for sale from other reputable companies. The Minister is being too specific and may cut out of the market genuine potential advertising aimed at giving a simple message to the public.

When I said at the outset that I was not sure that my colleague was getting the message across, my suggestion was that covering the acquisition of specified goods or the provision of a specified service would not remove the potential for the type of advertising to which I referred. It has been brought to my attention that this is how it is handled in other countries. If there is a specific reference to the car model, the caravan or whatever, the relevant information must be given, but if the advertisement is in general terms it would not be possible to do that. That is why I want clarity in the section. Was it the intention to remove the possibility of publishing a simple advertisement of goods for sale with credit available?

Mrs. O'Rourke

That possibility was not adverted to until the Deputy's amendment was tabled because we were concerned with the detail of advertising and so on. This amendment seemed to be against the thrust of the Bill.

Mr. Cullen

I did not agree with the wording of the amendment.

Mrs. O'Rourke

The Deputy puts it slightly differently. I would like to think about it during lunch time if the Chairman agrees. However, other Deputies are offering.

Mr. Kemmy

This amendment could do more harm than good. Although it is designed to help the Minister, and I take the point made by Deputies Cullen and Quill, this amendment could put words in the mouths of people and bad thoughts in their minds about how to circumvent the provisions of the Bill. A job lot advertisement would be a way around the provisions of the Bill. It reminds me of an incident in Limerick where a well known outfitter in the clothing industry advertised fire damaged suits and clothing for sale — there had been a small fire that had been put out in half hour.

Mrs. O'Rourke

That was misleading advertising.

Mr. Kemmy

People flocked there for two months from all over Munster because they thought they were getting a bargain once the reference to fire damage was put into the advertisement. There is no need to tell people how to get around the Bill; they will find ways. Deputy Quill meant well by her amendment but it will have the opposite effect to what she intended.

Chairman

Deputy Flood and Deputy Bruton have something to say on the same amendment. I do not think we will get through all the amendments.

As I will not be here this afternoon, I have a proposal to put regarding next week's business. There is a short Bill of 12 sections — the Competition (Amendment) Bill, 1994 — to be dealt with. If today's session is anything to go by it may take quite a long time, but we need not restrict the proceedings to one day. The Minister for Enterprise and Employment, Deputy Quinn, will be available on Thursday next, 14 July. Will all the parties be represented on that occasion? Is it agreed that the committee will meet at 10.30 a.m. on Thursday, 14 July? Agreed.

Sitting suspended at 1 p.m. and resumed at 2.15 p.m.

Mr. Flood

The effect of section 23 on advertising will be great. There is much information involved and it is right that the Minister should communicate that information to the public by way of credit advertising. When we talked earlier about television advertising we were critical because we thought it would be difficult to communicate all the information. While it is right that we should communicate the information, it may not be possible to include the extensive information required in a particular advertisement. I ask the Minister to consider another way to achieve this objective.

Mr. R. Bruton

This matter underlines the desirability of giving the Director of Consumer Affairs discretion in requesting the withdrawal of advertisements or designing codes of practice. A simple advertisement in a shop window stating "Credit Available" is not offensive and should not be banned. If the director has discretion in the matter, over time he could decide what is and is not acceptable. The only alternative to giving the director further discretion would be to add a subsection along the lines of that proposed by Deputy Cullen to permit an unadorned statement and specify that in the Bill. Certainly one could not permit claims of "cheapest credit in town" or claims that suggested they had an edge over their competitors.

Mrs. O'Rourke

I have discussed the matter with my officials and have thought about it. To take up Deputy Bruton's point, it is certainly not offensive but it is alluring to say "come into my casbah, and there is credit available" without giving a breakdown of credit. On the other hand people have the right to advertise location and goods on offer in a general sense. Deputy Cullen referred to the UK response to a situation that had arisen. However, we were not able to confirm that. I am keen to have a general assumption that specific cases will be scrutinised but I have residual fears about the allure element of advertising in a general sense.

We are slightly better positioned than perhaps other consumers. I amagine that the words "credit available" is like a green light to some people who are unable to leave the marvellous bargains behind, even though the specifics still have to be spelled out.

I will come back to this point on Report Stage. We have not had time to look into the matters to which Deputy Cullen referred, bearing in mind that the amendment tabled was so different from what the Deputy subsequently put forward.

Mr. Cullen

I understand that in the UK one cannot advertise a specific Ford Fiesta for instance without detailing all the conditions. However one can advertise "Fords for sale, credit available" because the advertisement is not specific. In a sense, the way I use the word "specified" is covered by section 22 where all the other provisions are listed. I am quite happy that the Minister will come back to this on Report Stage.

Mrs. O'Rourke

We will not only consider the point the Deputy has put forward but discuss it with the Director of Consumer Affairs. That may take up Deputy Bruton's point on the wider use of the Director of Consumer Affairs' discretionary powers in the interpretation of this Bill.

The points raised in discussion were entirely different from the amendment so we will have to rethink the matter on the basis of the debate that has taken place.

Amendment, by leave, withdrawn.

Question proposed: "That section 23 stand part of the Bill."

Mr. R. Bruton

If the APR is to be the prime indicator of cost effective credit, and we are trying to get consumers to compare credit on the basis of APR, why do we not require the people advertising goods on credit terms to state in their advertisements the APR applied. That would seem to be a logical extension of what we are doing elsewhere.

Mrs. O'Rourke

Advertisements will have to include a state of the cash price of the goods or service, the total cost of credit, the number and amount of instalments and so on as listed in section 23 (1). That is the detail of the credit agreement rather than the global APR figure but I understand that the APR will have to be provided.

Mr. R. Bruton

We have listed the statement they will have to provide but that does not include the APR.

Mrs. O'Rourke

I am assured that the advertisement will contain the APR, and that is provided for in section 22.

Mr. R. Bruton

Section 22 refers to people whose primary business is providing credit whereas this section deals with people whose primary business is selling goods but are providing credit in a similar way to a hire purchase arrangement. If one can establish before the court that the primary business is selling goods section 23 would apply and not section 22 to which the APR applies. Certainly the items listed in section 23 (1) would look more complete if APR were included.

Mrs. O'Rourke

I agree. I take the Deputy's point and we will seek to rectify the matter.

Question put and agreed to.