The retailer’s collapse last week has led to nullified gift cards and angry holiday season customers who gave worthless Christmas presents to family and friends.

Xenophon said legislative changes should protect consumers by placing a legal obligation on external administrators to honour gift cards before creditors.

Funds used to purchase gift cards or deposits paid for goods would be kept under a separate account by businesses to protect them if a corporate collapse occurred, under the proposed changes.

“Consumer law has not kept up pace … Gift cards are more popular now than they were 20 years ago,” Xenophon told reporters in Sydney.

“It just seems sometimes a bit crass to put cash in an envelope (for a gift).”

The final recommendation would require directors of companies that collapse to be personally liable for the value of gift cards and deposits paid for goods.

“I call on (administrators) Ferrier Hodgson today to actually honour these gift cards,” he said.

The comments follow a petition launched by a Queensland councillor Paul Tully on change.org

Meanwhile, other retailers, including Coles and Kogan, have promised to exchange Dick Smith gift cards bought at their stores.

AAP