By Kevin Peachey
Consumer affairs reporter, BBC News
The consumer minister was foiled in his attempt to buy a Roches' CD
Nobody is immune to being caught out by rip-offs - not even the new Consumer Minister, Kevin Brennan.
The MP once paid for a CD by off-the-wall folk trio The Roches, only for the disc never to arrive through the post.
It is a story common to many consumers who have lost out financially - often involving much larger sums - and now the government has announced plans to help them get their money back.
A new role of Consumer Advocate is central to its policy blueprint - laid out in its White Paper - aimed at protecting consumers during the downturn and beyond.
Under the plans, he or she will raise awareness of consumer issues and take cases of "national importance" to court on behalf of groups of consumers seeking compensation or refunds.
While broadly supportive, some consumer groups had called for an ombudsman with greater powers. Citizens Advice wanted the role to include resolving individual cases.
On the case
The lyrics to one song on a recent Roches album say: "I had no shoes and I complained until I met a man who had no feet".
Consumer groups fear that many people think that complaining fails to achieve anything, that it can be difficult to get compensation, and that many do not realise what their rights are anyway.
Research by the Office of Fair Trading (OFT) has estimated that there were 26.5 million problems with goods or services bought in the year to April 2008, costing consumers an estimated £6.6bn.
So the government is planning for the new Advocate - who will be in position early next year - to be as comfortable appearing in front of the television cameras as in the courtroom.
They want a face to oversee consumer education and lead court action - something close to a cross between former Watchdog presenter Anne Robinson and Sir Paul McCartney's lawyer Fiona Shackleton.
The role, which will be advertised in the autumn, would command a "competitive salary" and be part of watchdog Consumer Focus, Mr Brennan said, but legislation would have to be brought in first.
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The Advocate will lead group actions in cases similar to the recent compensation claims made by people who suffered burns and rashes from faulty leather sofas. It is based on a similar role in place in Scandinavia.
If a company is taken to court, the consumers affected will be asked by the Advocate if they want to be part of the group action seeking compensation. They will get a second chance if the company is found guilty.
However, the Advocate is unlikely to have these powers as soon as he or she enters their post - as consultation and a new law would be needed first.
"The Consumer Advocate proposal is really good news because it will help to further foster a healthy balance between consumers and businesses," says Ron Gainsford, chairman of the Trading Standards Institute, which represents trading standards officers.
The blueprint also outlines policies which Mr Brennan describes as "promoting responsible borrowing and lending" with the country in recession.
Credit card debts will come under the spotlight
For instance, the government wants a ban on lenders sending out unsolicited credit card cheques.
Consumers also incur handling fees for using credit card cheques, often 2% of the value of the transaction, while there is no interest-free period and people do not benefit from the same level of protection if things go wrong as if they had used their plastic.
But debate over these credit card cheques is nothing new. In recent months the government has signalled its intention that card providers stop sending out these cheques without the cardholder's consent.
Another plan is for consultation on the regulation of credit and store cards. Again, this has a sense of deja-vu about it.
In 2005, the Competition Commission proposed that store card statements should carry warnings to alert consumers to the high interest rates charged by lenders.
The government wants the latest discussions to consider issues of concern such as:
- Whether credit card companies set customers' minimum repayments too low
- Providers raising the interest on existing debt
- The order in which card debts are paid off, which at present means the most expensive is first.
It also wants the Office of Fair Trading (OFT) to review the market for credit with an APR of more than 50%. This includes so-called "payday loans", promoted as short-term credit for sub-prime borrowers, and doorstep lending. The OFT said it had not put a figure on what defined high-interest credit in terms of its review.
"The credit crunch has highlighted these in sharper focus," said Mr Brennan. "More transparency with credit card costs will drive down price."
But he pointed out that caps on interest rates could push sub-prime borrowers towards illegal loan sharks instead.
Critics will argue that the whole process could still be continuing as the UK climbs out of recession and the economic outlook changes again. The government says the market has changed substantially as a result of the downturn so a fresh study is needed.
The OFT said a report would be ready by early next year.
An independent credit card comparison website, run by the Financial Services Authority, will be set up in 2010.
The Consumer White Paper also outlines plans to tackle rogue traders and scam-artists, such as a national team to tackle internet-based scams.
Mr Brennan said all these proposals had been budgeted for and would cost £3m a year by 2010/11 - but he refused to outline whether cuts would be made elsewhere in the department to pay for them.