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Blair pledges consumer protection over savings clubs

24 November 2006
Prime Minister Tony Blair has pledged greater scrutiny of savings clubs after 170,000 low income families lost £41 million when the Farepak club collapsed last month.

Tony Blair, speaking in Parliament, vowed to give more support to the families in this "very, very difficult" situation.

"We will do our best not merely to mitigate the effects of Farepak's collapse, but ensure this does not happen in future," he averred.

The Department of Trade and Industry (DTI) has been under pressure to launch an investigation into the collapse of Farepak, which has not yet been explained to customers.

Savings clubs are not at present regulated in the same way as banks or building societies.

A Commons motion urging Farepak's banker, HBOS, to release the £30 million it recovered from the company for customers has now received the signatures of 90 MPs.

Meanwhile, trade minister Ian McCartney has set up an emergency fund to assist the families hit by the collapse.

Contributions from the public, as well as banks such as Barclays, Nationwide, and Alliance & Leicester, and retailers Marks & Spencer, Tesco and Sainsbury's, have brought the relief fund to nearly £6 million.

For more information about savings accounts, click here.

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