The Law Commission examined the issue of consumer prepayments on retailer insolvency in a July 2016 report which recommended new legislation to protect consumers in certain sectors.

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 this year through our comprehensive Consumer White Paper.”

The government said it will also work with consumer groups and businesses to clarify the law so that it is clearer at what point a consumer legally owns a product.

It aims to address cases where a consumer will have paid for goods which are still in a retailer’s possession when the retailer enters administration or becomes insolvent, making it unclear if legal ownership of the goods has been transferred and can be used to pay creditors or not.

The consultation is due to be launched soon, while the Consumer White Paper will follow later in the year.