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 : http://www.oft.gov.uk.
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.
NOTES
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.