Dáil Éireann Debate, Tuesday - 10 November 2020
65. Deputy Catherine Murphy asked the Tánaiste and Minister for Enterprise, Trade and Employment if a consumer-focused gift voucher guarantee scheme will be introduced in order to provide a degree of consumer confidence ahead of the Christmas shopping period and into 2021. [34641/20]
View answerI thank the Deputy for proposing this idea at what is a very difficult time for both consumers and businesses. I take it that the scheme referred to by the Deputy would guarantee gift vouchers issued by a business that went into liquidation or ceased trading. While the aim of enhancing consumer confidence in gift vouchers is understandable, the introduction of a scheme of this kind would raise substantial practical and policy issues.
As the Deputy will be aware, tour operators and travel agents who provide packages or linked travel arrangements are required to provide security for the refund of payments made for packages that are not subsequently performed due to insolvency. This security can take the form of a bond in the case of licensed travel agents or tour operators, or of an insurance policy. The required level of insolvency protection is determined by reference to the turnover of the tour operator or travel agent and entails significant costs for these businesses. The oversight of the insolvency protection arrangements for the 223 tour operators and travel agents currently covered by these arrangements also involves a substantial administrative and regulatory function for the Commission for Aviation Regulation. Introducing a similar insolvency protection regime for the large number of gift vouchers issued by businesses would be a significant regulatory undertaking. It would also be costly, and so is not a step that could be taken quickly or without detailed consideration and consultation.
If the State were to guarantee gift vouchers then there would be a considerable liability on the State as well as a costly and substantial regulatory and administrative workload perhaps requiring the details and registration of every gift voucher issued by every business in the State. A State guarantee for gift vouchers would also privilege gift vouchers over other types of prepayments made by consumers such as deposits for goods, annual subscriptions for services such as gyms, or payments to savings and Christmas clubs. It is reasonable to ask why gift vouchers would be protected against insolvency while other, and in many cases, larger prepayments made by consumers would not enjoy similar protections.
I do not know of any jurisdiction that has a guarantee scheme of this kind. In 2015-2016, the English Law Commission considered whether businesses should be required to provide protection for gift vouchers. It concluded that the economic burden of such a requirement on businesses would be disproportionate to the benefits that consumers might receive in return. It further held that the case for giving preferential protection to gift voucher holders over other unsecured creditors had not been convincingly made.
For these reasons, I have no plans to introduce such a scheme.
