Memorandum submitted by the General Consumer
Council for Northern Ireland
ABOUT THE
COUNCIL
1. The General Consumer Council for Northern
Ireland (Consumer Council) is a statutory non-departmental public
body established in 1985 with the general duty to promote and
safeguard the interests of all consumers in Northern Ireland.
Its mission is to make the consumer voice heard and to make it
count by all those who make decisions that affect consumers.
2. The Consumer Council has specific responsibilities
for energy (including natural gas, electricity and coal), passenger
transport and food. In addition, the Consumer Council has been
proposed by the Government to take on the role of the consumer
representative body for water and sewerage services in April 2006.
In many ways the Consumer Council provides a utilities "one-stop
shop" for Northern Ireland consumers.
3. The Consumer Council performs its role
in many different ways including conducting research to determine
consumer issues and views, influencing policy and decision making,
campaigning for the best possible standards of service and protection,
and handling complaints in line with its statutory duty. The Consumer
Council plays a key role in ensuring that consumers are informed
and educated, and that they gain the necessary skills and confidence
to exercise their rights with responsibility in line with the
Northern Ireland Consumer Strategy.
ABOUT THIS
SUBMISSION
4. The financially excluded of Northern
Ireland face many of the same situations as vulnerable consumers
throughout the rest of the UK. In this submission we seek to present
information that relates specifically to Northern Ireland.
ABOUT NORTHERN
IRELAND
5. The consumer is big business for the
growing Northern Ireland economy. In 2004 to 2005 the consumer
spend was estimated at £14 billion. In terms of everyday
essentials the 1.7 million people in Northern Ireland spend around
£1 billion per year on passenger transport, £598 million
on energy and the food industry has a turnover of £2.2 billion.
6. Although consumers here have more disposable
income it is also apparent that the level of consumer detriment
is also very high. The Office of Fair Trading research shows that
the overall level of consumer detriment in Northern Ireland is
likely to be some £¼ billion per year, or £358
per household per year.
7. In order to get the best deal for their
money it is important that consumers understand their rights and
responsibilities, and have the skills and confidence necessary
to ensure they receive the best quality services and value for
money. However, only 40% of consumers here feel they understand
their rights compared to around 70% of consumers in Great Britain.
| FACT BOX
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| — Northern Ireland consumers have 12% higher household expenditure costs, as a proportion of income, than the rest of the United Kingdom.[126]
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| — On average in Northern Ireland, 19% of household income comes from benefits compared to 12% in the UK as a whole.[127]
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| — 18% of households in NI are in receipt of housing benefit compared to a UK average of 15%.[128]
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| — 1 in 3 homes in fuel poverty.[129]
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| — 17% of adults here have a disability compared to 14% in Britain.[130]
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| — 1 in 5 households with no personal current account—81% of NI households have a current account compared to 89% in the UK.[131]
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| — 13% of households in Northern Ireland have no savings or bank account, compared to the UK average of 6%.[132]
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| — The average individual debt in Northern Ireland is £2,300.[133]
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8. NI has higher poverty rates than both Great Britain
and the Republic of Ireland with more than 185,000 households
(>500,000 people) in NI deemed to be poor.[134]
9. The Office of First Minister and Deputy First Minister
(OFMDFM) are currently developing, and still consulting on, an
Anti-Poverty Strategy that includes:
a new priority focus on Financial Hardship reinforcing the
importance of measures to increase the uptake of financial entitlements
and reduce indebtedness and financial hardship.[135]
ACCESS TO
BANKING SERVICES
10. It is a matter of great concern to the Consumer Council
that 19% of households in Northern Ireland do not have a current
account compared with 11% in the UK as a whole.[136]
11. It is our view that this figure may reflect the poor
deal offered to customers of the big four banks in Northern Ireland.
In November 2004 the Consumer Council and Which? made a
super-complaint against the big four banks to the Office of Fair
Trading (OFT). It was our assessment that the big four banks:
— pay consumers considerably less interest on credit
balances;
— charge significant sums for activities that other
banks do not charge for at all;
— make charges that often lack transparency; and
— display a striking degree of similarity in terms
of what they charge for and the amount they charge.
12. In May 2005 the OFT referred the PCA market to the
Competition Commission because it found evidence of behaviour
among the four largest banks leading to, or demonstrating, weak
competition between them.
13. This is an ongoing investigation but the Competition
Commission intends to publish its emerging thinking in February
or March of this year.
14. The Consumer Council believes that the lack of competition
amongst the big four banks discourages product innovation and
that the high charges, particularly the penalty charges, discourages
some of the more vulnerable consumers from holding a current account.
THE ROLE
OF THE
FINANCIAL SERVICES
AUTHORITY
15. The Consumer Council welcomes the work carried out
by the Financial Services Authority (FSA) in Building Financial
Capability and has been pleased to represent Northern Ireland
in the Schools Working Group. However, our concern is that whilst
the strategy will be well co-ordinated in Great Britain the impact
and co-ordination ability of the FSA is limited in Northern Ireland
because they do not have a local office. We regret that because
the FSA does not have representation in Northern Ireland financial
consumers here are often overlooked.
ADDITIONAL INFORMATION
16. Please find attached a copy of the Consumer Council's
publication The Price of Being Poor: Short Changed.[137]
January 2006
126
Family Spending: A Report on the 2003-2004 Expenditure and
Food Survey, National Statistics, June 2005. Back
127
as above. Back
128
Family Resources Survey 2003-04, National Statistics, April
05. Back
129
News release-Hanson Underlines his commitment to beat Fuel
Poverty, 2 June 2005, Fuel Poverty the State of the Nations
Feb 2004, Department for Social Development. Back
130
Investing for Health, DHSSPS, March 2002. Back
131
Family Resources Survey 2003-04 National Statistics, April
05. Back
132
as above. Back
133
Taking the Credit, The Consumer Council, 2004. Back
134
Bare Necessities, OFMDFM, nTSN Research, Democratic Dialogue
2003. Back
135
New TSN-The Way Forward towards an Anti Poverty Strategy, A Consultation
Document, Phase 2, June 2005, www.newtsnni.gov.uk/phasetwo.pdf Back
136
Family Resources Survey 2003-04 National Statistics, April
05. Back
137
Not printed. Back
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