Dr. John Fingleton

Dr. John Fingleton, Chairman of the Irish Competition Authority, provided what will likely be his last major service to Irish consumers last week, when he published a report which shows that the Irish ban on below cost selling is costing consumers an average of €500 each year. We wish John well in his new position as head of the UK Office of Fair Trading. He will undoubtedly have some future frustrations but they are unlikely to match the number he has had in his current position. 

Events in the past week sum up the lamentable position of the Irish Consumer. The big employers' lobby group IBEC teamed up with the trade unions' umbrella body ICTU in opposing the ending of the ban on below cost selling commonly known as the Groceries Order and a born-again consumers' "champion" Eddie Hobbs fronted a new television series on RTE1 called Rip-off Republic. Last June, the Minister for Enterprise, Trade & Employment, Micheál Martin TD termed Hobbs a "consumer advocate" when he announced the membership of the Interim National Consumer Agency, a new body he said would make the Irish consumer "king." The  National Consumer Agency itself terms Hobbs "Financial Consultant, FDM." There is no error because Hobbs is another example of an Irish solution to an Irish problem. He in fact rides two horses at the same time. A month after Martin's announcement, the Taoiseach (Prime Minister) added further ballast to the new consumer body headed by an insurance industry veteran, with the addition of his ex-girlfriend Celia Larkin.

Eddie Hobbs says that his company "FDM Ltd routinely acts as a financial coach to over 300 business owners and separately leads development on international wealth management systems."

Eddie Hobbs with colleagues at 3Q Solutions

Also last week, The Irish Times reported that five Ministers and six Ministers of State either wrote directly or forwarded submissions to Minister for Justice Michael McDowell on behalf of groups opposing his plans to introduce cafe bars, official correspondence reveals. Documentation released to TG4 under the Freedom of Information Act shows that 58 members of the Fianna Fáil parliamentary party made submissions to the Minister opposing the plan.

In June McDowell dropped proposals for cafe bars and opted instead to reform the restaurant licensing system in the face of widespread opposition from within Fianna Fáil. The correspondence released to TG4 reveals that Minister for Agriculture and Food Mary Coughlan wrote personally to Mr McDowell on May 26th highlighting concerns raised by vintners in her Donegal constituency. Ministers Brian Cowen, John O'Donoghue, Mary Hanafin and Dermot Ahern forwarded representations made to them about the cafe bar proposals. Ministers of State Tony Killeen, Conor Lenihan, Pat "the Cope" Gallagher, John Browne, Ivor Callely and Tom Parlon also passed on submissions they had received. Overall, 67 members of the Oireachtas sent submissions to the Minster for Justice opposing the introduction of cafe bars. It is understood most of the submissions passed to the Minister had been drawn up either by groups representing publicans or by those opposed to the extension of alcohol outlets on road safety or health grounds.

The Groceries Order

The Kremlin, Moscow - The Groceries Order is a throwback to the age of Soviet central planning

The Competition Authority said last week that the Groceries Order was a relic from the era of protectionism, insecurity and weak economic performance. "The Groceries Order is directly costing the average household up to €481 a year (between June 2004 and June 2005). This corresponds to a total amount of €577 million for all consumers," it said. John Fingleton cited the use of the order in the prosecution of two supermarkets last year for providing discounts on baby food. "If this logic was applied in other sectors, for example clothes, it would make post-Christmas sales a criminal activity. We are urging the Minister to take the opportunity to remove one of the most anti-competitive and protectionist devices from the Irish statute book."

Even the most delusional former Soviet central planners would likely concede that a ban on below cost selling which promotes offsetting credits from suppliers to big purchasers, would inevitably distort the market. The French say plus ça change, plus c’est la même chose and today the producer interest is still king as it was twenty years ago. In 1985, the new airline Ryanair was a threat to the status quo and the business lobby group the CII (Confederation of Irish Industry), a precursor of IBEC, was also in harness with ICTU. On one side, there was the interest of a big member Aer Lingus paying fees by head count and on the same side was a big head count paying lots of union fees.

John Fingleton says in relation to the Groceries Order, that far from being wiped out, convenience stores have a bright future. They are thriving in virtually every town and village in the country, reflecting the reality of the modern shopping experience. As the economy has grown, consumers have demanded more convenience and pay a premium above supermarket prices for the service. This has been reflected in the proliferation of stores such as Spar, Centra, and Mace. These are usually locally-owned shops with ties to large wholesale and distribution firms such as Musgrave's and BWG. Price cuts from greater competition are not funded by price rises on other items. Retailers fund discounts by seeking better deals from their supplier, which is why the strongest opposition to the abolition of the Groceries Order comes from food wholesalers and manufacturers. So that simply is an explanation for IBEC's self-interest.

Eddie Hobbs

Riding two horses at the same time takes a lot of skill. and a neck as tough as a jockey's genitals, is surely some help. 

When Minister Micheál Martin appointed Eddie Hobbs the "consumer advocate," to the interim board of the new National Consumer Agency, the Consumer Association of Ireland (CAI) expressed "its deep concern at the decision not to offer it a seat on the Interim Board." The CAI said that as the only truly independent consumer organisation representing the needs of the Irish consumer for almost 40 years,  it was  "an outrage" that it was ignored in this manner. The CAI went on to say that "it is a poor day for Government representation of the consumer and a wake up call to those who must now join with the Consumers' Association of Ireland to fight harder than ever to ensure experienced and truly independent representation of the needs of the Irish consumer and the voice to demand it."

The Minister's plan for another toothless quango was set in train and that was even before the Taoiseach offered his ex-girlfriend the lollipop of a place on the board of the National Consumer Agency. As I listened later on the day of Martin's announcement, to an interview on RTÉ Radio 1's Five Seven Live programme with Michael Kilcoyne the chair of the CAI, it crossed my mind that the senior people in the organisation must have felt that they were real plonkers. They simply had themselves to blame for being sidelined by Martin. Hobbs had been provided a platform as a consumers' champion by the CAI, while also generating business for his various financial services companies.

Surely if the CAI believes that Hobbs cannot represent it, why the hell is he still a Council Member of the organisation?

Eddie Hobbs had been a senior manager in the financial services firm Taylor Asset Management, that went bust when its founder Tony Taylor fled to the UK, following the stealing of clients' funds.  Hobbs subsequently became a finance spokesman and Council Member of the CAI. However bizarrely, he continued to be both a financial adviser and a seller of financial software to both financial intermediaries and big financial service companies such as Eagle Star. 

One of Eddie Hobbs' financial services companies is financial software company 3Q Solutions. John McManus of The Irish Times disclosed last June that Hobbs owns 18 per cent of the ordinary equity, according to the most recently filed annual return. 3Q's site says that Hobbs "is a leading personal finance journalist, and is a Director and Finance & Competition spokesperson for the Consumers Association of Ireland. Eddie principally works as a financial consultant to both personal and business clients."

3Q's site says that financial services company "Friends First is the market leader in income protection also known as permanent health insurance (PHI) in Ireland with unrivalled claims history in this space. The income protection market is largely untapped in Ireland. Friends First wanted to increase their market share and penetrate this market gap with a unique proposition."

'3Q’s Safeguard produced phenomenal results with an increase in sales of over 140% in the three month pilot phase before full roll out', Eamonn Twomey, Head of Strategic Development Friends First said."

The company site also says that "Irish television presenter, Eddie Hobbs, has launched a new book entitled Short Hands, Long Pockets, which aims to help people make the most out of their income. The book, a follow on from his series of RTÉ - Show Me the Money, gives people concrete help on managing finances. Short Hands, Long Pockets is additionally supplied with the novel software - Wonga WizardTM, which has been developed by Irish wealth management and financial planning solution provider, 3Q Solutions, to provide a simple and user-friendly way to understand money.

"Consumer advocate" Hobbs' 3Q on what it can do for financial services industry firms

“The Wonga WizardTM can be used in the individual household, laying the foundation for a person to take some action to get their individual finances in order,” notes Eddie Hobbs. “The client can then go to a financial organisation with the goal of maximising their finances and making their money work harder.”

3Q Solutions’s own business model is immersed in the Wonga Wizard software. Comprised of three main areas – information, advice and collaboration, it allows the user to develop a clear understanding of ongoing monthly outgoings and incomes. The model provides value to the customer, constantly giving them feedback on any information they input into the software and providing context to their spending habits by alerting them to their top ten expenditures."

Conflicts of Interests, Self-Interests and Vested Interests

So here we are where a Corkman might term anyone a gobshite, who would believe that Eddie Hobbs as "consumer advocate" would fillet a financial services company, which his own company so self-servingly lauds. The Minister doesn't see a potential for a conflict of interest and RTÉ the State broadcaster apparently also has no concern.

Here we are too, back where we started, with a manufacturing economy powered by world class companies such as Ireland's top exporter Dell, top chipmaker Intel with a head count of more than 4,000, the top global drugmaker Pfizer and many more, while craven politicians kowtow to vested interests in the non-traded services sector, who flourish at the expense of the consumer both directly and indirectly, through the significant sustenance of public procurements.

Michael McDowell said some years ago that his political party the Progressive Democrats (PD), has to be radical or redundant. John Fingleton's Competition Authority has produced a report on restrictive practices in the legal profession. What are the chances that McDowell will do anything to endanger the lucrative status quo of those who control the Law Library? The PD leader Mary Harney said in May 2004 that she would seek to identify "hoarders of development land" who were adding to the rise in house prices. We are still waiting.

New York's Queen of Mean Leona Helmsley famously said that "only the little people pay taxes." The little people in Ireland appear to be viewed in a similar fashion. Last week it was revealed that beef baron Larry Goodman headed the list of the recipients of Farmers' Dole (the new CAP system) from Brussels at a cool sum of over €10,000 per week, for even just watching the grass grow.  There are many others on big sums paid by taxpayers in Holland and Germany. Not only can wealthy people get this uncapped dole for doing nothing, when their land is rezoned for housing or roadbuilding, the value can increase twenty-fold. It is thirty-two years since the Kenny Report proposed that development land be valued at the price of agricultural land plus twenty-five percent.

All these issues may continue to seem peripheral to those who are on a roll and their coat holders. However, not too long ago, the Japanese too thought that the economic cycle had been abolished and since 1991, they have experienced four recessions.

Finally we conclude with some wise words from a veteran of the Irish financial services industry:

"The problem with the Irish financial services community is that it's so small. This leads to highly-incestuous relationships. It makes it difficult for people to be independent if they've spent any time in the industry. When there is a requirement for courageous decisions there is a `don't rock the boat' type of mentality and individuals who were quite vocal beforehand are nowhere to be found."

The words of Eddie Hobbs as reported by The Sunday Business Post in 2001.

Should we wonder if he was talking about himself??

Related: Anti-competitive Groceries Order costs average household almost €500 a year