Farepak collapse 'highlights consumer protection dearth'

28-11-2006

Farepak collapse 'highlights consumer protection dearth'
The collapse of Christmas savings scheme Farepak has exposed a "serious lack" of protection for consumers, MPs today claimed.

According to the Treasury select committee's report on financial inclusion, a long-term strategy is urgently needed to introduce safeguards to ensure such a situation does not arise again.

More than 100,000 people are thought to have lost an estimated £50 million when Farepak ceased trading last October.

Committee chairman John McFall says that the Office of Fair Trading, the Financial Services Authority and the government must cooperate to expand existing advisory services to cover savings and insurance as well as banking and credit schemes.

Although he welcomed the creation of the Financial Inclusion Taskforce, Mr McFall said it was "vital" that financial inclusion was promoted across all levels.

"Improving the financial capability among people who are currently financially excluded will require much more active engagement, rather than just distributing leaflets or putting information on a website," the chairman explained.

In light of today's financial inclusion report, Teresa Perchard, director of policy at Citizens Advice, revealed that the charity was pleased MPs wanted action to be taken sooner rather than later over the Farepak collapse.

"This scandal has forced thousands of families into difficult financial circumstances through no fault of their own and cannot be allowed to happen again. Already bureaux have been advising people how to avoid getting into debt as a result, but we fear many families will get into difficulties that last well beyond Christmas," she commented.


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