Office of Fair Trading
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OFT to carry out awareness campaign following Farepak collapse

OFT to carry out awareness campaign following Farepak collapse

OFFICE OF FAIR TRADING News Release (53/07) issued by The Government News Network on 28 March 2007

The OFT welcomes the announcement by Treasury that £1 million is to be made available for an awareness programme to help consumers understand their options when saving for Christmas and the relative benefits of what's on offer. This announcement follows the recommendations made by Brian Pomeroy today in response to the collapse of the Farepak hamper company last year. The losses suffered by Farepak customers highlighted the need for greater consumer education on the range of alternatives available. The OFT will run this campaign working closely with others in the public and private sector.

Shortly after the collapse of Farepak, Ian McCartney, DTI Minister for Trade requested that the OFT in conjunction with the FSA and DTI, provide him with advice on the options to address the issues arising from the situation. The OFT and FSA jointly presented a number of options. Amongst these, was that consideration should be given to how consumers are treated under company law in the event of company failure, and to strengthen the position of consumers in terms of their right and ability to take representative actions where money is available. Regulation of the hamper market or prepayments in general was not seen as a viable option as it would involve substantial additional costs that were likely to be passed on to consumers.

The advice was provided on 14 December 2006 and is available from the OFT website :

The OFT understands that the Minister wants to await the reports from DTI's Companies Investigation Branch and the Administrators before considering the options further and that his priority has been to agree arrangements with hamper companies to protect customers' prepayments. The OFT welcomes the Minister's statement that he will consider the range of options further once all investigations have been completed and looks forward to discussions at that point.

1. John Fingleton, OFT chief executive, provided advice to Ian McCartney on 14 December 2006 on the regulatory options to address the issues arising from the collapse of the Farepak hamper firm. This was in response to a request from the Minister when they met on 8 November 2006. The advice was put together in conjunction with the FSA.

2. As the advice was provided in December 2006, some information included may have been overtaken by events.