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Hamper scheme cash ring-fenced to stop losses

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29/03/2007

Cash paid into Christmas savings schemes, such as the crashed Farepak operation, will now be protected following a Government review.

The hamper industry has agreed that from now on customers’ savings will be kept in ring-fenced accounts that will not be affected if the company running them gets into trouble.

The Treasury review was undertaken after 150,000 people lost an average of £400 each when Farepak went under in 2006.

“Ring-fencing customers’ contributions will ensure that their money can only be returned to them and the agents if the company goes bust,” said consumer minister Ian McCartney.

“Families will then be able to put something aside for Christmas in the knowledge that their money is safe and there will never be another Farepak,” he added.

Sarah Miller of Citizens Advice said: “It is essential that people’s money is protected properly in the future to prevent the misery that thousands of Farepak customers, unfairly and unexpectedly, suffered last year.”

The Treasury review did not examine the causes of Farepak’s sudden collapse or make any suggestions as to how these schemes can be regulated in the future.

However, Farepak’s administrators, BDO Stoy Hayward, said that the collapse of the business was caused by the fact that £33m ‘lent’ to its parent company, European Home Retail, was not paid back.

 

 

 

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