AT THE end of October, the Government introduced legislation that allows Irish residents to buy British premium bonds and other similar products across Europe for the first time.

Before this, consumers living in Ireland were prohibited under the Gaming and Lotteries Act from buying prize bond-type products in other EU countries.

However, following a complaint from an Irishwoman who wished to continue buying British premium bonds after returning home from living abroad, the European Commission found that the Irish stance ran counter to EU law. The Department of Justice decided not to appeal this decision and amended the law to lift the ban.

The question now is whether consumers will eschew Irish prize bonds in favour of their British equivalent - premium bonds - which offer higher jackpots.

Prize bonds are State guaranteed investments. Instead of earning interest, purchasers have the chance to win tax-free prizes. Owners can win more than once on each bond as they are entered in regular draws. They can also cash in their bonds at any time (after the minimum holding period of three months) for their full face value. They can can be bought online on www.prizebonds.ie, at local post offices and at selected banks and stockbrokers.

Irish prize bond draws take place weekly, with more than 2,500 prizes. The maximum weekly prize is €20,000, but the vast majority are worth €75. Following changes made to the scheme's prize structure over the last year, there are now eight monthly draws with a top prize of €500,000, and four monthly draws with a jackpot of €1 million.

In the UK, premium bond prize draws are held every month with two top prizes of £1 million (€1.22 million) and more than 1.5 million other prizes, most of which are worth £50. However, more than 1,700 prizes are worth £1,000.

Given the greater size and number of prizes up for grabs, will Irish prize bond fans switch their affiliation to the UK? Michael O'Keeffe, chairman of the Prize Bond Company (a joint venture between An Post and Fexco, which operates the prize bond scheme) isn't concerned about losing business to the UK.

"We don't see it impacting on our business," he says, "because our new prize structure is now quite attractive." The top jackpot prize may be slightly higher in the UK, but the population (and therefore the customer base) is much larger, he argues, which reduces the chances of winning.

Sales of Irish prize bonds more or less plateaued for several years until the company unveiled a new prize structure in September 2007. Net sales (total sales less any bonds cashed in by customers) jumped by 39 per cent to €40.3 million last year on the back of this change. O'Keeffe expects net sales to be significantly higher again this year. He also predicts that the total amount invested in prize bonds will hit €800 million by the end of 2008.

The popularity of Irish prize bonds received an unexpected boost in September because of the sharp loss of confidence in the banking system. Sales rocketed before the Government stepped in to guarantee the banks. "There was a nervous period there," O'Keeffe recalls. "People were quite nervous, and [they] did put a significant amount of money into prize bonds - a huge amount of money compared to what would normally have come in."

Prize bonds tend to be associated with gifts given at First Communions, birthdays and Christmas, and indeed sales always jump in December as prize bonds are snapped up as handy stocking-fillers. O'Keeffe expects that sales will jump by €3-4 million next month, compared to an average month.

However, prize bonds are more commonly bought as an addition to an investment portfolio than as a present. According to market research carried out by the Prize Bond Company, some 36.1 per cent of people who bought prize bonds did so as a secure investment, compared to 13.1 per cent who bought them as a gift.

O'Keeffe attributes the enduring appeal of prize bonds (which first became available in 1957) to the fact that they are State guaranteed, and that you can cash them in at any time. Market research has shown that they appeal to all social classes, and although the scheme's customer base is slightly skewed towards older groups, people across all age groups buy prize bonds.

Prize bond owners are sometimes heard grumbling that the draws aren't high-profile enough. Although they are open to the public, unlike the National Lottery draws they aren't televised. However, O'Keeffe argues that "it wouldn't be the most exciting thing watching 3,000 prizes being drawn" each week. The results of the draws are posted on the company's website, www.prizebonds.ie, each week and winners are contacted by post at their last known address.

Although the Prize Bond Company goes to some lengths to make contact with winners, a total of €1.3 million in prize money (made up of 11,233 prizes) is currently unclaimed. These prizes are held until the winner comes forward. Although a great many of these are small prizes of a few hundred euro, some are substantial. The biggest unclaimed prize is currently €20,000. The winning prize bond was bought in May 2001 in Limerick and the prize was won in October 2004, but as yet it remains unclaimed.

It's hard to find a household in which at least one family member hasn't received prize bonds from a doting granny or godparent at some point. So before rushing out to buy a raft of expensive Christmas presents, why not help any prize bond owners in your family to check whether they were a winner over the years without realising it?

If they know the number of their bond, it can be tracked using the bond tracker facility on www.prizebonds.ie. If the details of the bond have been lost, call Fexco at 1850-671000 who may be able to help. And who knows? A very nice Christmas present could be waiting for them in the form of an unclaimed prize.