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Sunday, June 01, 2008

The useless [Expletive Deleted] at the Irish National Consumer Agency


President McAleese presents Taoiseach Brian Cowen TD with the Seal of Office of Taoiseach at Áras an Uachtaráin

Last month the new Taoiseach Brian Cowen made waves when the Dáil microphones picked up a brief conversation with Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan.

Fine Gael had earlier raised a report in the Sunday Business Post on the big disparity between what big British retail stores charge for the same items in Ireland and the UK.

“Bring in those people and get a handle on it,” Cowen instructed Coughlan. “You know all those fuckers.”

Coughlan soon after, met representatives of the National Consumer Agency.

The earthy language used by Cowen, may have surprised mother superior types but visitors to Ireland are often surprised by the Irish love of swear words and the common use of "Jesus Christ," not exactly in anything that might resemble a religious incantation.

When extensive transcripts of US President Richard Nixon's taped conversations in the White House Oval office were released, during the Watergate Congressional hearings, many passages, contained the term [Expletive Deleted].

One gem from 1971 when the US dollar's link with gold was broken, riled the Italians.

"Whatever about the pound," Nixon said. "I don't give a shit about the lira."

"Impeach the [Expletive Deleted]" became a popular slogan on protest posters.

Back to our own [Expletive Deleted]...

The National Consumer Agency had its genesis in the establishment of the Consumer Strategy Group in March 2004 under the chairmanship of Ann Fitzgerald who was Chief Executive of the Irish Association of Investment Managers.

It was a time when the issue of "rip-off Ireland" was getting a lot of attention.

More than four years later, the National Consumer Agency is run by Ann Fitzgerald and like many of the quangos, that have been spawned in the past decade, it has a questionable impact.

It appears to get involved in issues only after they have raised publicly elsewhere.

Its biggest failure is that it has failed to see the web as an effective tool in providing consumers with comparitive price information on key goods and services.

Finfacts said in its submission to the Consumer Strategy Group in 2004 that: The one dramatic measure to both empower the consumer and promote competition would be to set up a national web service providing consumers with comparative prices of key products and services in principal urban centres.

Dramatic measure is right. Wouldn't that be the day!!

Submission to Consumer Strategy Group July 2004: Public policy has failed consumers in two areas in recent years. Progress in deregulation has been glacial while thinking on consumer information is stuck in the mindset of the 1970’s when the display of price lists was first mandated.

Deregulation
Where market deregulation has been dependent on our own Government’s initiative, the preferred option has been to defer decisions, usually by using the Competition Authority to carry out a study. The deregulation of the taxi trade did not simply pose the same challenges as radical change in the legal or pharmacy sectors. Simply put, taxi drivers are not an economically powerful interest.

There has been some recent reform in the insurance sector, which has had an impact on prices and it is an illustration of what can be achieved. The Government is belatedly addressing the issue of tribunal lawyers’ fees and that may have an impact on charges generally. However, this is just a start. Reform of the system of designating development land is still awaited, three decades after the publication of the Kenny Report. There isn’t a political appetite to change the corrupt system where agricultural land can increase twenty-fold in value when zoned for development. The impact of land prices coupled with lack of effective competition in the service sector sustains high prices while global competition in manufacturing maintains a downward pressure on product prices. It’s a ridiculous situation that Dublin prime office rents are among the highest in the world (see: www.finfacts.ie/cbre.htm).

Where Brussels mandated deregulation has occurred e.g. air travel and telecoms, or new entrants have entered existing cartelised markets- Bank of Scotland entry to the mortgage market and German retail groups Lidl and Aldi entry to the food retailing sector, consumers have significantly benefited.

Consumer Information
Since the mid 1970’s publicans have been required to display prices in their premises. Even if such lists were positioned to be legible, which most of them are not, they are of limited value in large urban areas. Recently in Dáil Éireann, there was a discussion on requiring dentists to display prices of various procedures in their surgeries. Why not have these lists displayed so that they would be visible from the exterior of a premises or bring the issue into the modern age and use the web where practical?

The EU measure requiring pricing to be placed on products, which was introduced last year, is also of limited benefit as consumers have lost the price benchmarks for many products. This is particularly the situation in large urban areas where it is not uncommon for prices of standard items to vary in the range of 15%-30% in similar type business establishments, even on the same street. When the practice of printing recommended retail prices (RRP’s) on products ended, retailers in areas with large transient populations were giving the opportunity to profiteer.

The one dramatic measure to both empower the consumer and promote competition would be to set up a national web service providing consumers with comparative prices of key products and services in principal urban centres.

Through requiring business operators in designated areas to provide the prices of stipulated consumer products and services and having these prices updated bi-annually on an online searchable database, the consumer would be able to conveniently check for price ranking by street and area. It should also be possible to compare prices with the manufacturer/distributor’s recommended price level, which could differ for central Dublin than for example Kiltimagh.

The goal would be to establish a nationally recognised service that with the support of a significant budget (including marketing) would become a key part of the process of setting prices. The practice of increased prices for late drinking should also be highlighted as should the application of cover charges. Business operators would be reluctant to head the price league and be significantly out-of-line with comparable competitors. A separate category of the website could provide comparison of prices of a basket of products at the main multiple retail outlets.

The online system does not have to be a big bureaucratic operation as price lists could be updated online.

The online service would also be of benefit to tourists. We are deluding ourselves if we believe that our expensive brand tag will not have an impact on our travel business.

There should also be a requirement that the prices of certain products and services be visible from the exterior of premises similar to restaurants e.g. the services at a hairdressing salon.

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