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Co-op announces ring-fenced Christmas savings scheme

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by Jan Harris
Co-op announces ring-fenced Christmas savings scheme

The Co-operative Group is launching a Christmas Savings scheme in the New Year, which will protect savers’ money if the company collapses.

All money saved in the new scheme will be placed into a special trust and kept separate from the Co-op’s other finances.

This means that it would not be considered an asset of the business if the Co-op fell into financial difficulties, and would therefore not be used to pay other creditors.

Members of the Farepak Victims Committee have helped the Co-op to develop the scheme.

When Farepack collapsed in 2006, the 114,000 members of its Christmas Savings scheme lost savings totalling £37 million.

The members lost an average of £400 each.

Martyn Wates, deputy group chief executive of the Co-operative Group, said:

“The memory and impact of Farepak’s demise is still felt by many households within 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.”

This Christmas, according to Moneysupermarket.com, just 10 per cent of people will use savings which they have set aside specifically to fund the festivities.

Twenty-five per cent will dip into other savings to fund Christmas, compared with 15 per cent in 2011.

Moneysupermarket.com found that only 38 per cent will use disposable income to pay for Christmas presents, while 10 per cent will use store or credit cards.

Three per cent will rely on an overdraft to keep them going over Christmas.

Kevin Mountford of MoneySupermarket.com said: “Responsible budgeting and spending really is a must this Christmas, to avoid a costly financial hangover that runs into January.

“The last thing anyone wants is to be paying off the cost of Christmas past next year.”

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News posted: November 9, 2012

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