[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 24 November 2006, 15:07 GMT
Debt fears for Farepak customers
By Rory Cellan-Jones
Business correspondent, BBC News

Catalogue detail from Farepak website
Farepak's collapse has highlighted the need for affordable credit
Savers who lost money when the Christmas savings firm Farepak collapsed are getting deep into debt.

The BBC has discovered that some have turned to a doorstep lender which charges very high interest rates.

In the playground of Southville School in Feltham we found many parents who had lost money after Farepak collapsed.

Some had borrowed from family but others had taken more desperate steps. One woman told us someone who seemed to be a loan shark had approached her.

"He came up to me at the school gate and said: 'Do you need some money?'. I said 'No', and he said 'Well you lost vouchers' and I said 'Well I don't need it off you'", said Lisa Tuckwell.

Instead she turned to a home credit firm called Shopacheck, which has an agent in the area.

The company offers shopping vouchers, and Lisa took 1,100 worth.

The trouble is, from next week she will have to find a weekly payment of 33.

'Expensive credit'

It appears that Shopacheck is also doing good business with other Farepak customers across the country.

Adele Dunne is a Farepak agent in West Yorkshire, whose customers lost a total of 2,500.

She told us that she had borrowed with Shopacheck in the past. "My Shopacheck agent told me that she'd sold 5000 worth of vouchers in a week after Farepak went bust."

Gerry Stevens, corporate affairs director at Shopacheck, insisted that his firm was not exploiting Farepak customers or offering them a bad deal.

He said his firm dealt with people who had "fluctuating financial circumstances" and did not make them pay penalty charges if they missed a repayment on their vouchers or a loan.

"That is not the case with mainstream lenders", he said.

'Double scandal'

The Competition Commission is about to unveil a final report on home credit firms.

The inquiry followed a complaint from the National Consumer Council (NCC), which said today that the plight of Farepak customers highlighted the need for affordable credit for people on low incomes.

"It is a double scandal", said Janice Allen of the NCC.

"The people who saved with Farepak thought they were doing the right thing. Now they find themselves forced onto expensive forms of credit."

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific