Examination of Witnesses (Questions 240-243)|
24 OCTOBER 2006
Q240 Chairman: In terms of financial
promotions, there is still a bit the FSA could learn from the
Advertising Standards Authority. As we mentioned earlier, we will
write to you on that and try to get your views in that particular
area. My last question has a constituency element. I have been
contacted by a number of constituents, and I presume other Members
of Parliament have been contacted, with regard to the collapse
of Farepak savings scheme. Only this morning I had an email from
a constituent, which said: "Myself and a number of my workmates
have been robbed in broad daylight by Farepak. Since January all
the girls within our workplace have been saving for Christmas.
We have scraped together the weekly payments only to be informed
now, when we have fully paid up our purchases in advance, that
our hard savings are gone." They are obviously asking me
and others to see what we can do about it. I do note from a newspaper
report that Ian McCartney, the Consumer Affairs Minister, will
meet the Financial Services Authority and the Office of Fair Trading
to discuss tighter regulation for the savings club market following
the collapse of Farepak nine days ago. There are 100,000 customers
thought to have lost savings up to £15 million due to that
demise. Do you have any comments on that or any information you
can give us in terms of a meeting with Ian McCartney?
Sir Callum McCarthy: I would say
two things. One is that I have huge sympathy for the people who
have lost money in this way and the second is that the FSA has
no responsibility whatsoever at the moment, as the law is drafted,
for this sort of scheme. It would require a change of law to give
Q241 Chairman: We are not asking
for a change of law, but again we are talking about restoring
confidence in long-term savings. Here is an issue where people
at the modest end of the market are putting their savings aside
and they are blown before Christmas.
Sir Callum McCarthy: In so far
as I understand the facts, I think this is a dreadful occasion
and I have great sympathy for the people. We will sit down and
explore with Mr McCartney or anybody else who wants to talk to
us about it and explain the responsibilities.
Q242 Chairman: Do you think it is
worthy of exploration and that the FSA can contribute to that
Sir Callum McCarthy: I do not
know enough about this sort of savings market to know, in terms
of a policy initiative and in terms of public policy, which is
the best bit of the government machine or the quasi-government
machine as a whole to deal with it. That is the thing that would
have to be explored.
Q243 Chairman: Yes. But when you
have people's individual savings going up in smoke, just like
that, there is a public policy issue here, and you, like others,
can contribute to that.
Sir Callum McCarthy: Yes.
Chairman: I think we have covered a lot
this morning. Thank you for your attendance. We look forward to
a continuing contact with you. Thank you very much.