Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 203-219)


6 JUNE 2007

2 See also Ev 51-4.

  Q203 Chairman: Welcome to the Committee. We have a vote at four o'clock and we are going to get you out of the door by then; could you introduce yourselves for the shorthand writer?

  Ms Cook: My name is Sue Cook and I am the Acting Director of Communications at the Office of Fair Trading, also responsible for consumer education.

  Mr Williams: I am Sean Williams, I am an Executive Director of the OFT board but also, just for the Committee's information, I am chairman of the board of Transact, the national forum for financial inclusion, in my personal life as well.

  Mr Brown: I am Colin Brown, I am a Policy Director at the OFT and I am responsible for consumer policy and strategy.

  Mr Ashworth: I am Gordon Ashworth, I am the Deputy Director in the consumer policy area and I worked particularly on the advice given to the DTI at the end of last year.

  Q204  Chairman: Okay. As I mentioned earlier to witnesses, if one of you answer the question that will be more helpful to us. Last December you suggested in your review of Farepak for the DTI that putting trust accounts in place would be, in your words, "unattractive to the agents and costly to consumers". In these circumstances, therefore, are you surprised that the agreement seems to have been reached on the creation of trust accounts for hamper products?

  Mr Williams: We are very pleased that they have managed to put in place the protection that we have heard about.

  Q205  Chairman: How feasible is it in your mind if you are saying on the one hand it is going to be very costly, do you think there could be problems in the region longer term with this?

  Mr Williams: That is really a matter for the company. We are very pleased that they have put the arrangements in place, whether they are costly or not.

  Q206  Chairman: What I am trying to get at is why did you say "unattractive to agents and costly to consumers"?

  Mr Williams: Because if there are costs involved in this arrangement, as the Committee itself—

  Q207  Chairman: No, no, no, but you made the statement "unattractive to agents and costly to consumers" so you must have had some basis for making that statement.

  Mr Ashworth: We felt that on the basis of the information we had at the time when we spoke to the hamper industry and trade association then—

  Q208  Chairman: It was not based on much evidence then, was it?

  Mr Ashworth: We spoke to the people we felt were relevant, the people who have to put this in place, and they felt at that time that it would be very difficult to do it. The length of time the negotiation has been going on has shown that there are a lot of issues here, but it is very pleasing that they are actually in a position where—

  Q209  Chairman: I understand it is pleasing, but the fact is that if the OFT comes out with a statement like this as Parliamentarians we would like to think it has a bit of weight and a bit of credibility.

  Mr Ashworth: It was based on the evidence we had available to us before Christmas when we gave that advice.

  Q210  Chairman: There does not seem to be much evidence. Where is your evidence then?

  Mr Ashworth: It was based on discussions with the hamper industry at the time who felt—

  Q211  Chairman: People anecdotally saying "This is going to be costly" and you just regurgitate that.

  Mr Ashworth: On the basis they had taken estimates, we understood, of how they could actually put that in place.

  Q212  Chairman: That does not seem very satisfactory to me.

  Mr Brown: We have had long experience of trying to get trade associations under our consumer codes approval scheme to put in place prepayment protection for schemes like this and it is the one element of our consumer codes scheme that businesses always say is the most expensive and the most difficult. We have had occasions when—

  Q213  Chairman: Do not let me be unfair to you, but the OFT have tried this and you have failed in the past; here we have another arrangement in place and it is done and you are giving it success.

  Mr Brown: We have not tried to get them in place, we have asked people—

  Chairman: Is it not the case of the OFT maybe having more powers or the OFT having more push on this, push drive on this.

  Mr Fallon: A bit more oomph.

  Q214  Chairman: Yes, a bit more oomph as Mr Fallon said. You are just sitting back, you are a bit reactive.

  Mr Williams: What we operate is a self-regulatory scheme whereby if different industries produce a—

  Q215  Chairman: But self-regulatory does not mean disinterest.

  Mr Williams: We then approve the codes if they comply with our standards. One of the main components of the codes is that they should have protection for prepayment, so we actually have been doing quite a lot to encourage self-regulation.

  Q216  Chairman: It is not a very satisfactory answer to my question. Has the Office of Fair Trading been involved in discussions about the formation of the new Christmas Pre-payments Authority and would you expect the new authority to seek an OFT-approved code. If so, what would that entail?

  Mr Brown: We have not been involved in the discussions so far. If the new association does have the prepayment protection requirement for its members we would very much welcome an approach from them for code approval.

  Q217  Chairman: How do you respond to the suggestion that you have missed the boat in relation to those seeking to save for Christmas 2007?

  Mr Williams: We were asked to undertake this awareness campaign at the end of March—

  Q218  Chairman: Let me tell you, because we had a Committee session a month or so back and Brian Pomeroy and others—has it not got back to you, surely the tom-toms ought to get back—did not know much about it.

  Mr Williams: We were only asked to even start thinking about it—

  Q219  Chairman: 1 March.

  Mr Williams: The end of March, and we have launched it two months later, last Friday. Two months to put a public awareness campaign together is a very short space of time.

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