Consumers:Despite problems with concerts, airlines and banks, it was a good year for the public, writes Paul Cullen, Consumer Affairs Correspondent.
For 25,000 Irish people, and many more observers, the defining consumer moment of this year occurred in the days after September 13th, when news of the crisis engulfing Northern Rock first emerged. Here were some of the thriftiest and most cautious consumers, who had eschewed the risks of trading in shares and followed the advice of financial pundits, and who had put their hard-won savings into high-interest accounts. Now, it seemed, all this wise counsel and sensible investment had come to naught, as the bank threatened to go down, taking thousands of savers' nest-eggs with it.
For a few days, everything went haywire. Queues formed outside Northern Bank branches in Britain and Ireland as depositors clamoured to withdraw their money. Others (I know - I was one of them) rose at 4am to do the same through the company's website, which had been inaccessible during the day. Panic begat more panic, and the scare started to impact on other financial institutions.
The crisis ended when the British Exchequer bailed out the bank and gave its customers the guarantees they wanted. Yet the damage to consumer confidence had been done, and many were left permanently scarred. The result was a new breed of mistrustful, pessimistic consumer, wary of the promised benefits of competition. Northern Rock, after all, was to be the saviour of the Irish saver; the arrival here of its internet-banking operation in 2000 threw down the gauntlet to established banks, which had been offering paltry rates of interest.
The Northern Rock affair delivered a number of salient lessons: hardly anyone knew how much of their savings were guaranteed by the State (the answer for most: very little); the Financial Regulator here could do virtually nothing about the problems of a foreign-owned bank; people are as inclined to believe an internet pundit as they are an established authority figure; and internet banking is fine when all is fine, but hopelessly inadequate in a crisis.
It was also another reminder that everything involves risk, something that is easy to forget when so much of modern discourse is devoted to the illusion of no-risk investment.
Northern Rock aside, 2007 was actually a good year for consumers. The Consumer Protection Act, which came into force in May, outlaws a number of scams and undesirable commercial practices and provides for on-the-spot fines for breaches of consumer regulations. The National Consumer Agency (NCA), which was put on a statutory footing by the Act, is to be the advocate of consumers' rights, equipped with strong powers to investigate abuses.
Before we get too excited, let's not forget that the NCA is firmly positioned under the wing of the Department of Enterprise, Trade and Employment. It remains to be seen whether it will bite the hand the feeds it, let alone any other hands.
Under its first chief executive, Ann Fitzgerald, the agency has made a decent start. Its surveys of supermarket prices have rattled a few cages in the retail sector, where food prices are remarkably uniform. It stood up for motorists by challenging the astronomical price-rises proposed for the introduction of barrier-free tolling on the M50, and took on NTL when the cable company tried to penalise customers who weren't paying by direct debit.
Ironically, the NCA's biggest success came in a relatively minor matter, when it persuaded MCD to pay compensation to the well-heeled fans whose enjoyment of a Barbra Streisand concert in July was marred by bad organisation. Yet, when similar problems arose earlier in the summer at Oxegen there was nothing like the same fuss, presumably because those affected were younger and less able or inclined to influence public debate. The NCA had no power to force the promoter to refund money to customers, but it demonstrated the force of moral suasion. Its counterpart in the financial sector, the Financial Regulator, has greater powers but tends to stick to the letter of them.
CAUTION IS THE byword here, as if no one wants to rock the financial boat, even when it's in the interest of the consumer. If the regulator would like the power to impose sanctions on banks that overcharge or insurance companies that mislead its customers, it hasn't told us yet.
The year was marked by a series of overcharging scandals, with one bank after another having to repay customers' money illegally taken from their accounts. However, apart from saying sorry, the institutions escaped with no sanctions. When you or I go into overdraft, we pay heavily for it; when a bank takes our money, it gets off scot-free.
There was more good news for the big institutions in October, with the decision of the High Court to find in favour of Quinn Direct in a case it took against the Financial Services Ombudsman. The ombudsman had ordered the insurer to refund a €25 administration fee levied on one of its customers who had filed a complaint. It then told the company to refund fees to all affected customers over a six-year period. However, the court decided the ombudsman had no right to make a blanket order in cases where no complaint had been received.
The decision, which has prompted the ombudsman to look for new legal powers, is a major reverse for consumers. Most consumer complaints involve relatively small amounts of money, and few can be bothered in the effort to recoup the sums involved. Companies know this, which is why so many make it hard for customers to have their complaints dealt with. There is little to deter companies from imposing hidden extra charges, if only the odd "crank" is going to look for his money back.
If the EU Commission gets its way, this unhappy situation may be about to change. Its consumer affairs commissioner is looking at systems of collective redress, which would allow, say, a consumer body to take collective action on behalf of a group of aggrieved consumers.
This was also the year airlines and their websites came under serious scrutiny in Ireland and by the EU, which found that half of all travel websites were "suspicious" because of misleading information, a failure to quote inclusive prices or other reasons.
One of the reasons the airline sector has managed to dodge complaints for so long is because most of its business is cross-border. If your Ryanair plane back to Ireland from Spain goes missing, leaving you in the lurch for days, you have to bring your complaint, if it isn't sorted out by the company, to the airline regulator in Spain. For all the frustration frequently vented at airports, few complaints are ever fully followed up, and we don't know what happens to them anyway because Ryanair, Aer Lingus and most other airlines won't tell us.