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
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
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
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
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
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
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
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
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 othershas it not got back to you, surely the tom-toms
ought to get backdid 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