Very pleased to launch the consumer investigation #labourconsumer – for the labour party this afternoon.
A bit long, sorry, but here were my comments at the launch:
“I had three young children in the house and friends around when my water pipes burst. I called the first company in the yellow pages and with water swimming around, asked me to sign a form as they needed to bring a digger in to do the work and it would cost more than a personal cheque from me could be guaranteed for. I signed. Three hours later, it was done. Three days later, and dry, the company took £1,000 out of my account. The next day, a further £2,000 – all I had.”
Now, this could have been anyone, but it wasn’t. It was me.
I became a consumer champion, not because I was savvy but because I was stupid.
I do believe in the power of consumer action. I was part of the team that started the Fairtrade Mark over twenty years ago – now the Rolls Royce of ethical labels, benefiting 1.15 million producers typically organised in co-operatives and their families in developing countries. I was co-author of Consumer Kids – a book that ended the sale of Playboy goods to primary school girls by W H Smith and led to new rules that prevent companies recruiting children to sell their products, like the Barbie MP3, to their friends at home and school.
I was the last Chief Executive of the National Consumer Council, before it was folded into Consumer Focus, which I led the founding of. My time there left me with a huge respect for those who work in the field of consumer and competition policy, often in the face of corporate power and bureaucratic opposition – for Which? For Citizens Advice and many others.
I still believe in consumer action. I represent a range of successful, co-operative enterprises that are owned by over twelve million consumers. And I am backing the Move Your Money campaign which today is holding a protest action across town at Barclays Bank.
But successful markets and successful enterprise is a dance between two – consumers can’t protect their rights without the backing of the law and government. That is why I am pleased to have been asked to advise the Labour Party, as an independent voice through this consumer investigation.
The advice will come from listening to those working in the field. But I bring to the table some lessons from my years since my rogue plumber. This is what I have learned.
1. We don’t need new rules – we have to enforce the ones we have got. As the NAO has shown, we have a stretched and broken patchwork of enforcement across the country.
2. All too often, when one consumer is ripped off, there are many others who are fleeced in the same way. So it makes no sense to have a system of redress that is based on individual complaints alone. We need collective redress – or what I call Portuguese style class actions.
A growing range of countries have opened up to the responsible use of class actions on behalf of consumers. These include Portugal (the first country in Europe to do so), the Netherlands, Norway, Spain, Italy and, further afield, Ontario, Australia and the United States. These regimes are all designed to improve on some of the downsides of the better-known US model, where damages can be multiplied and decided on by juries. Class actions across these countries, using the opt-out model, have ranged from handling the aftermath of disasters, including the Costa Concordia in Italy, through to faulty medical products, including breast implants in Australia, and low-value items, below £200 per consumer in Denmark.
3. The new dodgy practices tend not to be just the local rogue traders of previous years that may show up, shown up, on TV shows. They are big name, often global companies and they pick our pockets in new and more subtle ways, including:
– bargain then rip-off contracts that lock us in to a poor deal
– micro-charging that involve making pennies and pounds out of millions of customers.
4. Even if we have busted cartels and limited monopolies, the UK has a long way to go to have competitive markets. The example of the pensions industry which has up to sixteen layers of intermediaries dealing with the pension of an individual customer, each taking their own cut and paying their own bonuses is a case of the City getting away with gross inefficiencies and creating consumer loss in the process.