The collapse of Christmas savings firm Farepak has highlighted a ‘serious lack’ of protection for consumers, an influential group of MPs warned today.
Around 150,000 Farepak customers in the UK each lost an average of £400 when the company went into administration last month.
The Treasury Select Committee has called on the government to introduce safeguards so that consumers avoid a similar disaster in future.
Launching a report on financial exclusion by the select committee today, Chairman John McFall said: ‘It is vital that people are given confidence that their savings will be protected.
‘The Farepak case has highlighted a serious lack of consumer protection in this area. I want to see early action from the government, the OFT (Office of Fair Trading) and the FSA (Financial Services Authority) to consider how appropriate safeguards can be introduced to ensure that such a situation never happens again.’
It wants to see evidence of ‘substantial progress’ to improve consumer protection by the end of January.
Which? Prinicpal Campaigns Lawyer, Ingrid Gubbay said: ‘Victims of the Farepak collapse were failed completely by the market -they were doing exactly the right thing by saving for Christmas instead of using plastic store and credit cards – this sends a very discouraging message to consumers who are responsible savers. Which? supports an inquiry into the collapse and calls for closer monitoring of this market’.
The report also calls for more action and long-term government commitment to educating the public on dealing with debt and other financial issues.
Currently 70 per cent of schools only give infrequent lessons in personal finance.
Mr McFall said: ‘There is a need for dramatic improvement if we are to adequately equip young people for the complex financial decisions they will face.
‘It should be a priority for the Department for Education and Skills to ensure that financial education is seen as a core part of the curriculum.’