Consumer - Know Your Rights

There is a terrific article on the BBC online Magazine which I refer to. It highlights five consumer laws you should know when buying goods.

With it comes a few horror and good stories from punters. I am sure we can all relate a few stories about buying products and what the article shows is that you need to know your rights.


Travel


I do a lot of travel and the last few months two things have affected me.


1. Eurostar


I took a trip to Paris and that included a meeting in Lille. So I bought a ticket to Paris returning from Lille so I caught the SNCF train to Lille from Gare du Nord which incidentally is an identical train to the Eurostar in every detail. The Eurostar tickets were Business Class, fully flexible and I noted there was no difference in the price of a return ticket from Paris or the halfway point which is Lille - ah, well you pays your money. My meeting at Lille ended slightly earlier than anticipated and I was able to catch an earlier Eurostar that had coincidentally come from Brussels not Paris. The first thing is that there is no special facility at Lille for Business Class like a lounge. Then when I got to my seat on the train there were only 3 other passengers in the carriage and no one came through with a drinks or meal service. Eventually I had to buy some water and ask for some service. A person came through set out the meal table and then did not return.


I complained to Eurostar and it took weeks of wrangling as all they wanted to do was to compensate £30 for the missing meal. However, I argued that the ticket was Business Class and several services were missing which made the ticket missold. Only when I said that I was referring the matter to a solicitor under my rights as a consumer did they act - then suddenly they went over board and sent me a return ticket to either Paris or Brussels, Business Class. I had not asked for that or expected it, but had clearly touched a raw nerve.


2. Air Travel - Budget Airlines


I recently had to travel to Germany and, late as usual, I could not get back to Dusseldorf in time to catch my flight home and so had to make for the nearest airport which happened to be Ryan Air hub at Frankfurt-Hahn airport. It should be noted the 'Frankfurt' title is pretty stretched as it is over 200km from Frankfurt, about as far as Birmingham from London. No matter, it served a purpose. I called to buy a ticket but as I was inside a 4 hour limit to buy either online or by phone (I didn't know such a limit existed), I had to go to the airport to buy the ticket. I was quoted €239 over the phone which I was assured was the all-in price. When I got there, the price was €354 and I had to check a bag in for extra, I had also to pay for automatic check-in which did not work and priority boarding, the total was closer to €400 for a single flight.


It was late by several very sweaty hours and most of the time we had to wait at a packed gate. It went over the 4 hour trigger to get looked after but nobody manned any desks for Ryan Air and we were told to call them when we got back even though there were small families with thirsty children. When I got back I was told that you had to write in as salespeople didn't handle customer support calls and all is done in writing. Naturally I have received no reply.


For budget airlines, there is misconception that it is implied you only pay for what you get. That is not true - all airlines are governed by the same international compensation policy which have clear guidelines - Ryan Air get away with it as no one calls them out on it while they do not have staff focused on dealing with customer problems or complaints. There is a 'like it or lump it' and 'you pay peanuts, what do expect?' policy in action.


Buying A Car


Some years ago I bought a BMW 7 series - why, I don't know. I went into the garage to buy a 5 series and ended up with an exceptional deal on the 7 series that had languished on the showroom floor. It was an odd car - luxurious and annoying at times but very nice to drive. After about 4 months a recall letter came through and the engine management software needed a bug fixed so I booked the car in to have it done. I was expecting to pick it up later that day but got a call - they had done the fix but there was a problem with the transmission or gearbox. They needed it for another day.


4 weeks later and I still did not have my car back. They had put brand new software, put all the settings back to the factory ones, and still the transmission was stuck in 4th gear. They then tried to get me to take a replacement car for a while but I went to the garage to find my car and found it with it's transmission on the floor beside it, laid out like animal entrails. I turned to the manager and said I wasn't going to have that car back - it was clearly not going anywhere fast let alone back to me. It was not fit for purpose, i.e. driving.


There was long exchange of letters, some help from the Citizens Advice Bureau and a solicitor. In order to stop adverse publicity and have the law poking around, the garage agreed to replace the car with a new one and said I could have any BMW to the same value. I went for the 645i and applied the same discount which sent them into fits as they could sell those quickly. After some wrangles and legal threats, they agreed and I got my new car.


The key factors here were that the car was less than 6 months old and was effectively 'not fit for purpose' in that I couldn't drive it and they had changed the transmission once and could not get it to go. The law was in my favour within that 6 months period. The second thing was that it was the garage, not BMW who had to remedy it. In fact, BMW did not want to know and made it absolutely clear to me, in very legal terms, that they were not responsible for selling me a car not fit for purpose even though it bore their name and they manufactured it. It was entirely the dealer's responsibility.


Finally, it does not matter how big or expensive the item is, if it is not 'fit for purpose' you have six months to exercise your rights and demand your money back or a new product - your choice.


Buying on the Internet


I recently bought a new computer for my business on my credit card - it was with PC World Business. When it arrived, after a few goes, the power block failed. I phoned Sony as PC World said it was a warranty issue. Sony said they would send a new power block to see it it fixed the problem. Clearly this was my work PC, and so I exercised my right to reject it under the 7 days cooling off period you have for any goods or service bought on the internet.


In praise of PCWB, they were excellent and made no quibbles. They took the product back, collecting and delivering the new one of my choice at the same time at no extra cost and credited the full amount on my card within two weeks (with a bit of prompting).

PCWB are a good company - there was never any question of taking the product back for a full refund and the service was superb. I didn't replace it with another Sony, I bought Lenovo instead and it is excellent.

Parallel Universes?

The BBC contends that a report to published on the 'Phoenix Affair' where MG Rover was sold by BMW thanks to Government sweeteners in 2000 for a mere £10 then subsequently was run into the ground by the 4 members of its management team - allegedly.

The 'Phoenix 4', as they were known, are now known to have taken some £42m in pay and pensions before the company went belly up and the residual pieces had to be sold to the Chinese. It was a spectacular show as to how private equity can be not a good thing.

The Phoenix Four had somehow beaten off some heavyweight bidders to inexplicably 'win' MG Rover. To this day, no one really understands how this was achieved and I dare say that the report will, of course, not reveal which ministers actually contributed to what happened next by displaying consummate incompetence or, worse still, had a vested interest in making sure that a bunch of unproven, largely unknown private investors got to run one of the last decent British car companies. The rest is history.

The BBC's Robert Peston is spitting blood about how these individuals 'enriched themselves' while having no real interest in the firm's future or the workforce. It is at this point that my feeble brain clangs and I think, well surprise, surprise, there are real parallels with how banks acted in the last 10 years. I am sure financial people will beg to differ, but what the Phoenix Four did was to find something within the company that realised cash and they rewarded themselves with it. In reality, it wasn't illegal per se but it was a 'damned un-jolly' show. The parallels are there as the banking sector found something upon which to generate vast, effectively unreal profits that had nothing to do with the real worth of their banks or of real assets, to not show it on the their balance sheets and to effectively reward themselves lavishly and widely for their little scam.

So why are we spitting blood? I suppose in proportion, what the Phoenix Four did was highly 'geared' vs the eventual collapse. Put into context, the CEO of Lehmans, Dick Fuld, earned a mere $300m leading up to the spectacular collapse of the bank to the tune of around $700bn. But when you add up all the vast bonuses paid out in all the banks and the incredible losses they clocked up before having to be saved by taxpayers around the world, the principles are very similar. Banks borrowed money on the short term to fuel high risk gambling habits at rigged tables, and when someone found out the tables were rigged, we became liable for the full amount of profits they had previously made. Or have we yet paid the full dues? I would argue we haven't. Have we un-rigged the tables? Nope, we have refilled their vast wallets and allowed them to get on with it again. Only recently have some key people within the banking industry dared to break cover and revealed what the rest of us mortals already knew - banks were making money out of thin air.

The issues surrounding the Phoenix Four was that a great deal of jobs were at risk, the company eventually fell into the hands of the Chinese, ministers contributed to the incompetence and a small number of people made a lot of money in the process. That got a full independent inquiry in which it will likely be concluded that although the 4 individuals were rotten chaps to have taken so money out personally, in fact they were just rubbish businessmen who had no idea what they had bid for, couldn't run a company to save their lives, didn't know what to do when it went wrong but certainly knew how to realise some cash to pay themselves handsomely without a care for the workforce or the company. Where that leaves the idiot ministers involved, who are all around today, goodness only knows.

The parallels with what has occurred on a much more grand scale are there to be seen. In the case of banks, we bailed them out completely and, with few exceptions, the executives have either kept their jobs or have risen phoenix-like from the ashes. In their cases we will not get an independent inquiry which would reveal how we should not have allowed it to have happened or indeed how we can prevent it again for the future. The way the situation was solved was by the self-same people murmuring into incompetent ministers' and regulators' ears and persuading everyone it was a natural phenomenon and we must continue or else the world falls into oblivion and, heaven forbid, economic growth goes out of the window. The Planet Earth faced a fate that rendered the population as potential goat herders exchanging vegetables and beads for the future. To save us, there had to continue to be an incredibly small number of extremely wealthy people who make equally incredible sums of money while we watch in dumb satisfaction.

The Phoenix Four of John Towers, Peter Beale, John Edwards and Kevin Howe plus Nick Stephenson can rightfully claim that their clever accounting was chickenfeed to what ministers have allowed to happen and make us all personally pay for with the banks. It doesn't make any of it any the more palatable but it would be very good to get the names of all the individuals who benefited from the taxpayers' largesse over the last 10 years and get to know them equally well as a lot of people paid good money for them to have their lovely bonuses, fat lifestyles and to make sure they still have their glittering careers.

The poor chaps at Phoenix have had to make do with a paltry £42m between them and eek it out to cover the rest of their lives. Makes you feel quite sorry for them, doesn't it, when you put it like that?

Play The Wild Rover, No More

The track record of any Government interference in business is pretty grim but the affair of the so-called 'Phoenix Four' just about takes the biscuit.

Lord Mandelson had referred the whole affair to the SFO when he asked them to study the independent report which took four years to amass. The SFO has ruled that there is nothing worth investigating - which will no doubt inflame the Business Secretary as he was spitting blood over the whole affair.

But you reap what you sow. Not so long ago the whole 'Loans for Peerages' scandal blew away when the police were blocked in finding out what went on and the closer they seemed to get to the heart of the matter, the faster and more sternly were they rebuffed. Then we had the dealings of BAe in Saudi - where the Government intervened to stop the investigation on grounds of national security as US firms bayed for blood over the alleged bribes to get $multi-billion contracts. We had several futile and inconclusive 'independent' inquiries into Iraq and so perhaps it comes as no surprise that the SFO have snubbed Mandelson and found there is conveniently 'no case to answer to' in the sordid dealings surrounding MG Rover.

It was back in 2000 that MG Rover was sold to Phoenix by BMW for just £10 plus a £427m sweetener by the German company. The decision at the time to allow the sale for such generous terms to a group of 4 businessmen called Phoenix was in preference to a much more sensible bid which did include scaling back the workforce but at least all would have received substantial settlements in cash and pensions under the alternative scheme. Over the period between 200 and 2004, MG racked up £611m of losses yet when the company was to be sold to the Shanghai AIC the deal fell through and MG went into administration. Subsequently the assets were sold to Nanjing Automobile and the Phoenix Four somehow walked away with as much as £40m. MG is now back making cars at Longbridge, its spiritual home.

The Government in the form of the likes of Gordon Brown, Patricia Hewitt, the perennial loser in business, Stephen Byers and of course, the supreme goal-hanger, Tony Blair, thought they had 'done good' when they greased the wheels for the BMW-Phoenix deal. Subsequently, they allowed the Phoenix Four to run the business into the ground amassing the losses, more than £1billion of debt and a massively inflated pension deficit before departing with plenty of cash themselves leaving creditors high and dry. There are echoes of modern day banks but at least the bankers have kept their jobs while the workers got sacked - the Phoenix Four simply survived to do it all again.

The embarrassment to the Government contained within the independent report due to be published next month will be high. It was a sorry tale of poor judgement at best and gross negligence at worst while there was more than a whiff of dodgy, if criminal dealings, on the part of the Phoenix Four. Why Mandelson referred the matter to the SFO is a mystery.

He was clearly 'sure of a case to answer to', wasn't he? Or was it designed to embarrass his Labour colleagues to show them just how powerful he is? Or, indeed, was it an attempted payback for all those years in imposed political wilderness in Brussels where he had to amuse himself by billing plenty of expenses and getting his back scratched by oligarchs in return for favours?

But it is perhaps more apposite that Mandelson is still struggling over a car industry bail out. Claiming success on the scrappage scheme which came several quarters too late even though Germany and France had shown success instantly with their schemes, Mandelson has dithered over what to do with the car industry since his bold announcements on how he would sort out a £2.3bn scheme back in February - since then around £180,000 has been spent on scrappage as mountains of cars litter the factory holding areas, unsold.

It seems more of political muscle-baring in a vain attempt to empathise with a very disenfranchised car workforce who literally live each day as if it were their last in terms of a job. They have been in limbo since the turn of the year and it must gall them that when the banks needed saving there were several knee jerk reactions which paid little attention to cost implications and liabilities which wiped away the mess but created an even bigger long term problem in the process. Yet, even today he has dithered over offering guarantees on the potential Jaguar Land Rover deal - despite his pretty words about it being a priority industry. The car industry was set to stew in the mess created by the credit crunch and recession.

Thankfully, Jaguar Land Rover found its own way forward as the time lapse between talk and action by the Government was far too long for a desperate business to wait amidst all the pretty posturing by people like Mandelson.

So has Mandelson, fresh back from hob-nobbing with his clique of incredibly wealthy friends, suddenly been touched by the plight of the very people who put him in power - workers - or is it just one of his political games, using a nasty report to threaten and terrorise his colleagues, showing off his new omni-powerful role in the Government?

Jaguar Land Rover has got on with its own saving and attracted new money in ensuring the saving of nearly 15,000 jobs and a new, eco-friendly flagship model to lead its way to the future. All that without the famous Mandelson effect. Let's face it, his new found friends are not in the car industry and he dropped Deripaska like a stone when the Osbourne-snitching occurred, so saving the car industry was never his priority. Damaging his friends certainly is - look out Gordon, beware the mouth you fed.