Co-op launches savings trust to prevent Farepak-style losses

The mutual claims to be the first UK retailer to provide a trust to protect Christmas savings. 

The Co-op said thousands of its food shoppers save for Christmas by buying £1 stamps during the year that they can cash in when they do their festive shopping. The scheme, which launches in the New Year, would protect those customers from losing their money should the company go bust. 

The collapse of savings club Farepak in 2006 led to nearly 120,000 people in its Christmas club losing on average £400 each. Since then both the Office of Fair Trading, through its report on Farepak, and the Farepak Victims Committee have called on all businesses operating in this area to improve consumer protection and confidence in such schemes.

The Co-operative Group deputy chief executive Martyn Wates said: “The memory and impact of Farepak’s demise is still felt by many households in the UK.  Members of the Farepak Victims Committee have, to their enormous credit, kept the issue of consumer protection alive and I am delighted that, as the UK’s biggest consumer-owned business, we have been able to respond in this way.”