Victims of the Farepak collapse are demanding compensation, better regulation and for key figures in Farepak to be held to account for their actions. Some 150,000 savers lost an estimated £50 million when the Christmas hamper scheme collapsed in October 2006.
The research, carried out by Dr Basia Spalek and Sam King of the University of Birmingham, also finds that many of the savers were low paid women prudently saving for Christmas who have been forced into a cycle of debt as result. The research was commissioned by the Centre for Crime and Justice Studies and UNISON Welfare.
Farepak victims speak out is based on in-depth interviews with Farepak savers and examines the impact on their lives. Key findings include:
- Feelings of anger, anxiety and depression;
- Loss of trust in financial institutions;
- The sense of being kept in the dark about the fate of savings;
- Being forced into borrowing from relatives or taking out expensive loans.
- The research also finds that little warning was given that the savings might be at risk. In such unregulated markets, the authors argue, it is impossible for individuals to be fully knowledgeable consumers.
The research suggests a number of ways forward:
- All the savers should be fully compensated;
- The results of all investigations into Farepak should be made public;
- There is a need for enhanced, and mandatory, regulation of savings schemes;
- Improved information and advice for savers should be made available to enhance their understanding of the possible risks they may face
Dr Basia Spalek, one of the report authors, said:
'The idea that Farepak savers could protect themselves from the company's collapse is clearly challenged by this research. Policy discussion should be focused on the long term impact of financial harm and the appropriate regulatory responses, rather than the constant obsession with the slackening of consumer rights and company responsibilities.'
Richard Garside, director of the Centre for Crime and Justice Studies, said:
'Most Farepak customers have still to receive compensation for the loss of their Christmas savings. Many are asking why, if the government was prepared to underwrite Northern Rock to the tune of billions of pounds, no comprehensive help has been forthcoming. As it is, a significant source of social injustice remains hidden and unaddressed by the government and the financial authorities. Without concerted action other `Farepaks' are inevitable.'
UNISON General Secretary, Dave Prentis, said:
`Many thousands of low paid workers, including many UNISON members, lost money and faced a bleak Christmas as a result of the despicable behaviour of the companies involved. UNISON Welfare was able to help our members who lost out, but others were not so fortunate. They were left to pick up the pieces, with little help from anyone but family and friends.
`Companies should not be allowed to get away with this sort of daylight robbery, and their directors should not be allowed to remain immune from the harm they have caused. UNISON supports the demands for compensation and tighter regulation. We also want the Government to publish the Companies Investigations Branch report into the affair and help lift the veil of secrecy.