The National Consumer Agency plans new contract guidelines to outlaw waste companies and telecoms firms' restrictive terms, writes Mark Channing
The National Consumer Agency (NCA) is preparing new guidelines to remove the unfair terms from standard contracts that households enter into for a wide range of everyday services.
The move comes in the wake of an investigation into waste-collection firms, which can penalise households that switch providers.
Standard form contracts are popular with service providers such as bin companies and telecoms firms when signing up new customers. They are prepared in advance and offer little scope for individual negotiation.
Sean Murphy, legal adviser with the NCA, said: “Because standard-form contracts are pre-formatted and offered on a take-it-or-leave-it basis, the consumer is in a very weak bargaining position.”
In 2011 the NCA prepared a “grey list” of contract terms that may be unfair. It included terms involving penalties, cancellation clauses and hidden conditions.
We examine the contract terms that could be considered unfair.
Bin companies were identified by the NCA as an industry where unfair terms in contracts were prevalent.
Murphy said there was a lack of awareness among waste collection providers about their obligation under standard contracts.
Among the terms the NCA deemed to be unfair were where consumers of on provider had to forfeit credit balances and pay an administration charge if they cancelled their contract early. Another had a €100 charge for cancelling a direct debit.
When charges levied were deemed unfair, the waste companies were ordered to issue refunds.
Undertakings have since been secured from seven waste companies to amend their contracts and remove unfair terms. The companies are Panda, Greyhound, Oxigen, Greenstar, Country Clean Recycling, Advanced Recycling and the City Bin company.
A number of energy suppliers impose minimum terms and early cancellation charges in contracts.
Electric Ireland and Airtricity charge €50 to customers who cancel a 12-month gas and electricity contract early.
This rises to €100 in the case of Airtricity for dual-fuel customers who cancel during the first 12 months of a 24-month contract.
The NCA said cancellation fees would be unfair if they were deemed to be a penalty on the consumer, or if they did not reflect the true cost to a provider of the cancellation.
“If something acts as a penalty then there is almost a presumption of unfairness,” said Murphy.
The Commission for Energy Regulation (CER), a watchdog for gas and electricity providers, said that it regularly reviewed terms and conditions in energy contracts to ensure they were fair. It said it did not object to the early termination fees currently imposed and did not view them as being overly penal.
“Provided the terms of the tariff offered are clear, and that the customer is fully aware of the terms and conditions, we do not object to early termination fees,” said a spokesman for the regulator.
“However, if a supplier included termination fees in its contracts that the CER viewed as in being disproportionately high, then we could intervene,” he added.
The CER advised consumers to check the terms and conditions of their suppliers to find out if fees applied for cancelling.
Bord Gais does not currently have early termination fees attached to its dual-fuel contracts and is the only energy supplier that doesn’t. Its gas tariff is currently the dearest in the market, however, because the company is not allowed to compete with rival suppliers on the basis of price.
Simon Moynihan of bonkers.ie, a price comparison website, said: “Home communications in an area where the contract is often the subject of dispute.”
Standard contracts cannot be deemed unfair on the basis of price or quality of service, but there may still be an avenue of challenge.
Broadband contracts, for example, can last up to 18 months and may require consumers who cancel early to make all payments due until the contract expires.
Broadband providers Sky and Digiweb state in their terms and conditions that customers who cancel early are liable for the balance of the remaining period.
The terms of the contract authorise them to debit future payments directly from the customer’s current account.
The telecommunications regulator ComReg can help resolve disputes about service quality.
“We can intervene if a customer feels they should be released early from a contract without penalty because of poor service,” said a spokesman for the regulator.