Farepak: help now, then change the law

Let me add my voice to the chorus of condemnation of the people who have let down the 140,000 customers of Farepak, the Christmas hamper company.

It's difficult not to be shocked by the disgusting contrast between the wealth of Farepak's bosses - in particular, chief executive William Rollason and chairman Sir Clive Thompson - and the dire financial straits now faced by the victims of the company's collapse.

While people are right to be furious about this scandal, there are several important practical points worth making. The first is that many Farepak customers may be able to get their money back in full - and may not yet realise it.

Anyone who paid for contributions to Farepak using their credit card is entitled to reclaim the cash from their credit-card company under section 75 of the Consumer Credit Act. And if you paid using a debit card with the Visa logo on it, you may also be able to claim a refund using the network's chargeback rules.

These allow your bank to get your money back from Farepak's bank, on the grounds that the service you paid for was never delivered. Several users of the Moneysavingexpert.com website have already reported success using the Visa system, so if you paid with a debit card of this type, put your claim in today.

The second point is that this is a tale from which we must all learn. Saving for the cost of Christmas is, of course, prudent. But next year, everyone should avoid the Christmas hamper companies. A bank or building society savings account is a far better bet. Not only is your money protected by City regulators and official compensation schemes, your money will earn some interest, too.

Third and finally, this affair should serve as a kick up the backside to those in the Treasury who for some reason have decided the hamper firms do not need regulating. Although these firms take deposits in exactly the same way as banks and building societies, there are no rules that require them to keep customers' money ring-fenced.

The existence of voluntary trade bodies, such as the Hamper Industry Trade Association, is certainly no use. Although this group took a bond from Farepak, it appears that this money will now simply go back into a general pool of the company's assets being distributed by administrators. Customers may not see a penny of it.

n n n The Bank of England's decision to raise interest rates on Thursday took no one by surprise - Save & Spend has published several articles in recent weeks advising both savers and borrowers on how to respond to higher base rates. Now, however, the fun and games begin - which banks and building societies will try to pull a fast one following the base-rate hike?

Both mortgage lenders and savings providers have form in this area. Among the former, the trick is to raise lending rates by more than the Bank of England's rate - both Nationwide and Britannia building societies did this in August, after the last increase. With savings, meanwhile, watch out for providers that don't pass on the rate rise in full.

Some savings providers are even sneakier. In August, for example, Abbey, Alliance & Leicester and Halifax all announced they would offer savers extra interest, but they had cut their rates just before the base-rate hike, so customers were, overall, no better off.

For savers and borrowers, the only way to hold this lot to account is to be vigilant over the next few weeks as the banking sector announces its reponse to the base rate rise.

Keep a close eye on your provider's interest rates and don't be afraid to switch if better deals become available elsewhere. The most generous savings provider, for example, Landsbanki, has already said it will raise its rates by the full 0.25 percentage points. Will others follow its lead?