BBC News
watch One-Minute World News
Last Updated: Thursday, 13 December 2007, 03:07 GMT
Christmas challenges amid Farepak fallout
By Simon Atkinson
Business reporter, BBC News

OFT campaign
The Office of Fair Trading is keen to promote safe saving

For 24 years, Sharon Marais saved up for Christmas - putting money aside each week towards food for the festive season and enough for the freezer to last until Easter.

The firm she used was well-known to a couple of hundred thousand UK households until October 2006, when it became notorious throughout the country.

When the company - Farepak - collapsed, the average customer was left 400 out of pocket, with some losing more than 2,000.

Sharon, a 49-year-old cook, waved goodbye to the 166.30 which she had saved, having paid in about 4 a week from her 7,000 annual wage.

"Up until then I'd had good experience and would have recommended it to anyone," she says.

"But I ended up having to scurry around trying to find replacements for things I had already paid for but was not going to get.

"Now I would be wary about using hamper firms again."

Wait on date

Latest figures from BDO Stoy Hayward, the auditors called in after Farepak went into administration, show that 122,000 people customers and agents have put in claims for about 38m.

As well as saving for food hampers, many had paid for vouchers they had planned to cash in for presents at High Street shops.

But there have been warnings that victims should to expect to receive no more than 5p for every 1 they are owed - and there is still no indication of when the payments will be made.

Sharon Marais
I feel we haven't had any help whatsoever
Sharon Marais

So what have people who were dependent on Farepak for their Christmas savings done this time around?

For Sharon, failing to put money aside was not an option, and so this year she has been saving stamps at the supermarket giant Asda.

"It's not as convenient as the hampers were because you don't know exactly what you're going to get - it depends what is in store - so it's not as easy to plan and prepare, " she says.

"And having the hamper delivered to your house was useful."

But after a "lean" Christmas last year, this time she is at least confident she will get what she paid for.

"I just feel more secure with a big supermarket that nothing is going to go wrong this time," she says.

Ring fencing

One year on, exactly how much will emerge about the inner failings of Farepak still remains to be seen.

Following the collapse of Farepak, some people were worried about what to do - but there are safe options
Jon Sacker
OFT

While an inquiry by an agency of the Department of Business Enterprise and Regulatory Reform (formerly the Department of Trade and Industry) is set to be completed in early 2008, its report will not be published.

Only if court proceedings began - perhaps a prosecution or efforts to disqualify a director - would details of the report be made public.

The results may lead to greater regulation, the government says.

But for now, the most significant change is that hamper companies are being urged to use ring-fenced accounts to keep customers' money safe - all overseen by the specially created Christmas Prepayments Association.

And this week, the Office of Fair Trading, backed by 1m of government money, has launched its Save Christmas campaign, giving advice to people looking to put money aside for 2008's festivities.

Its aim, says project manager Jon Sacker, is to encourage people to save.

"Following the collapse of Farepak, some people were worried about what to do - but there are safe options.

"What we're not doing is telling people how to save. We're encouraging people to explore the different options and decide for themselves what's most important."

Social element

The chairman of the Central England Trading Standards, Authority Advice and Education Group, Paul McCabe, says that it is not simply about money.

Nadine Stevens
If I put the money in a bank account, I think I'd spend it, but if you do it like this, it's out of the way
Nadine Stevens

"As a trading standards officer, my gut reaction would be, 'Look at these schemes and look at what's the best economically for you.'

"But then we'd be stepping away from what attracts some people to saving."

He acknowledges that hamper schemes such as Farepak's were typically "the way your family or your mother used to save".

"There's a social element to it and tradition," he says.

It was for these reasons of tradition and habit that Nadine Stevens became a Farepak customer.

Now she has put her faith, and about 300, into the UK's largest hamper firm, Park Group.

Most of this year's savings have been spent - in the form of vouchers - buying presents at shops such as BHS and Boots.

The 30 that is left will go on a turkey "and a few other bits and pieces".

She was attracted to Park by the firm's reputation and history - although she knows that Farepak was hardly a fly-by-night operation, having operated since 1968.

"I suppose there's nothing to say that what happened to Farepak couldn't happen to another company, but so far, Park has been brilliant," Nadine says.

"I wouldn't be able to do Christmas without it. If I put the money in a bank account, I think I'd spend it, but if you do it like this, it's out of the way."

Restored confidence

The custom of people such as Nadine is welcome news to the likes of Park Group, which saw orders for this Christmas down by about 30% in the aftermath of the Farepak collapse.

Customer numbers slumped to about 399,000 from 617,000 the year before, with the number of agents also dropping.

Catalogue detail from Farepak website
Farepak promised to "give your family the best ever Christmas"
But executive chairman Peter Johnson says that there are "promising signs of recovery".

Orders for Christmas 2008, which it began advertising for this September, were 30% higher than a year ago.

As well as demonstrating a demand for the products, Mr Johnson says, it also shows that "the work we have done to introduce improved protection for our customers has helped to restore confidence in the industry".

Of course, the protection measures are too late for Sharon Marais, who stands to get about 8 back of the 160 she saved with Farepak.

"I'm not actually convinced by the measures taken so far," she says.

"I've tried to cut through the jargon, but I'm not sure it's going to achieve what they want it to achieve.

"I feel we haven't had any help whatsoever and that the people who ran Farepak have stolen our money and let us down."

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



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

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific