The Government has proposed new laws which could protect consumers who have prepaid for products when a business becomes insolvent.
The Department for Business, Energy & Industrial Strategy, which published the report, said the planned measures include requiring consumer prepayments to be protected in certain sectors.
This would apply to common forms of prepayment such as internet orders, gift vouchers and money saved in payment schemes.
The Government believes that this would strengthen its ability to “respond quickly to problems involving consumers who have prepaid for goods or services before a firm becomes insolvent”.
Likewise, the new laws would see prepayments safeguarded with legislation requiring businesses to adopt measures to protect customers against losses – whether that is through trusts, insurance or other mechanisms.
Commenting on the report, Business Secretary Greg Clark said: “When consumers prepay for items through savings clubs it is reasonable to expect that if something goes wrong, their money should have some degree of protection. The measures we are consulting on will give shoppers greater peace of mind.
“It’s all part of how we’re helping make markets fairer for all, especially the most vulnerable, as part of our modern Industrial Strategy – with more to come next year through our comprehensive Consumer White Paper.”
The proposed new laws form part of a packet of measures designed to protect consumers following insolvencies, who are often considered ‘unsecured’ in the event of a business collapse.
To view the report in full, please click here.