Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 220-239)


6 JUNE 2007

  Q220  Chairman: You say "last Friday" and in your brief you said that it was starting in Scotland. I spent the weekend in Scotland and this was where it was starting and I did not really get much of an idea—Sue, come on.

  Mr Williams: Sue will explain about how it will unfold.

  Ms Cook: I am very serious about it. Basically, just let me start by saying that the COI say that government campaigns normally take six to eight months from—

  Q221  Chairman: We have had it for Christmas then if it is eight months, we are now in June.

  Ms Cook: We have worked very quickly, and what we have done, because—

  Q222  Chairman: So why did you not make the point in March then, "Wait a minute, this will take six to eight months, we are only getting it at the end of March, we do not want to disappoint people here"?

  Mr Williams: We are very pleased to have been able to launch it on Friday.

  Q223  Chairman: I am sorry, I was meaning to be co-operative with you but your evidence—

  Mr Williams: Let me say we are very, very happy to help the Committee with this inquiry, so do not worry at all. We have put it in place in two months and got it launched and in the next two to four months, as Sue will explain, the whole campaign will unfold. Sue, do you want to give us the details of how it will unfold?

  Ms Cook: Basically we are aware of what you said at your last meeting, we were aware that we needed to very quickly get out to people who had lost out from the Farepak collapse, talking to them about the options available to them to save for Christmas 2007, which is why we had a launch last week. However, we believe that the main part of the campaign will be talking to consumers, including people who lost out from Farepak, and what we want to do is instead of running just an advertising campaign, the results of which are fairly transitory, what we intend to do is actually go into communities, work to develop tools within communities—

  Q224  Chairman: I have got you. I am sorry for rushing, but the Park Group which is 90% of the voucher market says that you have not consulted them.

  Ms Cook: No, because what we are doing is we are developing the tools with the community, with these different groups. We will talk to Park but the fact that Park—

  Q225  Chairman: If Park Group are there and they have got 90% of the market and they have a tradition of being involved, it would seem to me to be realistic and say let us go to these people and see what their ideas are so we can pick up the issue here.

  Ms Cook: We have talked to Farepak victims, particularly Susie Hall. When the trust is in place I am absolutely delighted to work with Park in terms of rolling out the campaign and in terms of developing the tools that we use, but we have consulted widely with the DWP, Citizens Advice, credit unions and also the private sectors and we have had quite a lot of conversations with them.

  Q226  Chairman: But credit unions say to us that the consultation has not gone beyond a superficial level.

  Ms Cook: No, no.

  Chairman: Really what I am saying to you here is I think we need a gee-up here. That is the reason why you have been invited to the Committee, to get the gee-up, to get something done. Peter.

  Q227  Peter Viggers: What arrangements are in hand to protect people who invest in prepaid schemes for funeral arrangements and is there a read-across, which can be used more generally?

  Mr Ashworth: The arrangements for prepaid funerals operate under the FSA regime through an exemption process whereby they can put trust arrangements in place and then they are free from most of the FSA regulatory regime. The FSA contributed to the advice that we gave to the DTI before Christmas and did make reference to funerals. They felt there were some problems around hamper schemes in terms of defining the actual product. That was something that we had come to a conclusion on as well, that there are a lot of unregulated things out there that people use quite happily. The risks will vary and identifying what you actually want to regulate is a particular problem, so we were at one with the FSA on that, that we thought that was not necessarily the appropriate way to go at that time.

  Q228  Peter Viggers: Are you satisfied that there are satisfactory arrangements to protect those who invest in such schemes?

  Mr Ashworth: In hamper schemes of the type—

  Q229  Peter Viggers: I am thinking of funeral schemes.

  Mr Ashworth: We are satisfied that that was followed to an OFT report and we are satisfied that that is in place at the moment and the FSA have not contradicted us at all.

  Q230  Jim Cousins: In March when you agreed to do the Christmas awareness scheme, who were you approached by?

  Mr Williams: We were approached by the DTI to undertake it.

  Q231  Jim Cousins: Why did you agree to it?

  Mr Williams: We thought that an awareness campaign of this sort could help the consumer in this market to understand better the products that they are trying to access.

  Q232  Jim Cousins: Did you explain to them that a COI type government campaign normally takes six to eight months to set up?

  Ms Cook: I think they were aware of that actually. We were asked to run a consumer education campaign to increase the skills of people who are not aware of the options available to them. I would imagine that the DTI and the Treasury who trusted us with this money were well aware.

  Q233  Jim Cousins: Sorry, the Treasury?

  Ms Cook: The Treasury entrusted us with the £1 million and they will be paying us £1 million to run the campaign. The campaign that we will run will go deep into communities. For £1 million we could have had eleven minutes of TV advertising; that would have taken us three months to produce and book. That would really have been transitory—okay, it would have created a bit of pizzazz at the time, but we are actually talking about real people having this information delivered to them in a face to face way so that they take it on board and they can use it in this situation and other situations, and we believe that that is a valid and very good use of £1 million rather than a quick advertising campaign which would not get those people to get those skills in a way that would be useful to them.

  Q234  Jim Cousins: How does your campaign reflect the fact that the trust account system will be up and running?

  Ms Cook: That has been agreed, as you heard earlier, recently, so our campaign will reflect that. We did not particularly want to launch before that trust was in place and of course everything we say will reflect the fact that people's money will be safe when they invest in Farepak—sorry, Park.

  Jim Cousins: Yes.

  Chairman: It is all happening this week.

  Q235  Jim Cousins: It is indeed. When you are deep into communities, just remember what happens on the streets of Portsmouth, the Committee has been told that already this afternoon. To what extent do informal savings products figure in your campaign?

  Ms Cook: We are going to cover things such as credit unions, banks and building society accounts, stamps and retailer savings schemes, milkmen-run schemes and hamper and voucher schemes.

  Q236  Jim Cousins: Sorry, milkmen?

  Ms Cook: Yes, it is a scheme that is used quite a lot actually where people give their milkman £2 a week and collect stamps and use that for Christmas, for buying a hamper or whatever. It is a popular scheme and it has quite a few similarities to hamper schemes. What we will do is we will include a wide range of things that are available to people. We are not in the business at the OFT of telling people what to do or what not to do with their money, how to save or how not to save, we are in the business of saying to people "This is your range of options, these are the features of these options, you need to choose something that will work for you as an individual; obviously the way that you save and the way that I want to save may be different". That is really what we are trying to do, we are trying to show people what the options are that are available to them, we are not telling them how to spend or save their money.

  Q237  Jim Cousins: Is it not inevitable that in your presentation if you point out that certain products are regulated through the Financial Services Authority or whatever, that is bound to steer people towards them?

  Ms Cook: There is an element of risk in everything that people do. If people are aware of what the risk is—for instance, if a major retailer went into liquidation and you have been saving with them, then you would lose your money, but the risk is obviously not that great in that situation. People are intelligent enough to understand that there are different risks in terms of saving in different places and it is up to individuals to decide what level of risk they are prepared to take. I do not know if Sean wants to add to that.

  Q238  Jim Cousins: Thank you, and you are going to cover supermarket. I do hope you will point out a gentleman this afternoon from Park referred to the Tesco's scheme—it is only fair to point out that I am passing on information from a constituent of mine but the Morrison's one actually is more generous.

  Ms Cook: I will bear that in mind.

  Chairman: We could not possibly comment. Michael, and then John.

  Q239  Mr Fallon: Ms Cook, could we just be clear about this advertising campaign for the £1 million. Did you tell us a few moments ago that there was not national advertising?

  Ms Cook: No, it is going to be advertising and what we would call consumer education which is actually—

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