Monday, 23 May 2011

Support for Regulation of Christmas Savings Schemes

I led a delegation to meet with Ed Davey MP, Minister for Employment Relations, Consumer and Postal Affairs to press for government support to protect the savings of members in the lucrative Christmas Savings Schemes market following the collapse of Farepak in 2006.

I was joined by Sir Ian McCartney and Suzy Hall, an independent board member of the Christmas Pre-Payment Association (CPA) and a 'survivor' of the Farepak collapse. For Sir Ian McCartney the meeting was ‘unfinished business’, following the key role he played in fighting for justice for the 116,000 agents and customers of Farepak.

I have continued the campaign for justice and the meeting with the minister followed a personal committment from the Prime Minister at PMQs on 24th November 2011.

The Directors of Farepak reached agreement with the Liquidators and a payment of £4million has been received. However, the terms of the settlement are confidential and further action against the Directors lay in the hands of the Dept for Business, Innovation & Skills who have commenced proceedings against its former Directors. Legal proceedings to disqualify directors of the failed business began in the High Court in February.

The government's Insolvency Service had applied to the court to disqualify all nine former directors of Farepak and its parent company. The nine, including former CBI boss Sir Clive Thompson, are fighting the action. As a result creditors of Farepak are still waiting for compensation at a rate of 15p for every £1 nearly 5 years after the collapse.

In the wake of the collapse, businesses in the sector such as Park Christmas Savings Ltd joined the CPA whose members have accepted a code of practice offering greater protection to savers deposits.

In the meeting, Ed Davey was ‘appalled’ that several high profile Christmas Savings Schemes run by the major supermarket chains were not members of the Christmas Pre-payment Association.

I have tabled an Early Day Motion calling on the major supermarkets to set an example to smaller traders and take membership as soon as possible and have written to them asking them to join the CPA.

Farepak was marketed as a savings club and its customers regarded themselves as savers and not creditors at the bottom of the pile waiting for compensation. The Farepak collapse has cast a shadow over the Christmas Savings Industry and it is a scandal that nearly 5 years later, people across the country still await compensation.The minister was appalled to learn that even now with the formation of the Christmas Pre-payment Association that supermarket giants like Asda are not members of the industry self-regulator.

Early Day Motion 1794 – Christmas Savings Schemes

That this House notes with concern that the major supermarkets operating Christmas savings schemes are not members of the Christmas Pre-payment Association; and urges them to set an example to smaller traders and take up membership as soon as possible.

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