Farepak fund fuels financial exclusion concerns

23 November 2006
John McFall, the Labour MP who heads the Treasury Select Committee on financial inclusion, has called on the British Bankers Association (BBA) to urge its members to donate to the Farepak Response Fund.

The Fund was set up to assist 100,000 savers who lost all their savings when the Farepak hamper and voucher scheme went bankrupt in October, losing an estimated £40 million of savers' money.

For many, the scheme was their only source of non-essential income for buying Christmas presents, for example.

Major contributors to the £5 million fund to help the savers so far include Tesco, Sainsbury's, Marks & Spencer, as well as banks Nationwide, Alliance and Leicester, and HBOS.

But Mr McFall stressed that banks' response was critical, because of a loss of public confidence in saving following the collapse of the Farepak scheme.

"There is a risk arising from what has happened here of serious damage to the reputation of the whole finance and retail industry," he said.

The Farepak saga has underlined the degree of financial exclusion suffered by some of the UK population, and helped fuel a government drive for banks to offer basic accounts.

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