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Farepak families loans 'target' Farepak families loans 'target'
(about 5 hours later)
An MP has said he fears loan companies are targeting families who have lost money from the collapse of the Farepak saving scheme.An MP has said he fears loan companies are targeting families who have lost money from the collapse of the Farepak saving scheme.
Hundreds of people across Wales lost money when the hamper and voucher company went into administration.Hundreds of people across Wales lost money when the hamper and voucher company went into administration.
Caerphilly MP Wayne David has called for more awareness of high borrowing rates charged by some loan firms.Caerphilly MP Wayne David has called for more awareness of high borrowing rates charged by some loan firms.
Credit unions have also expressed concerns but one major lender denied targeting former Farepak customers.Credit unions have also expressed concerns but one major lender denied targeting former Farepak customers.
According to Hebah Price, from the Lifesavers Credit Union in Bridgend, some firms were offering annual borrowing rates as high as a 177%.According to Hebah Price, from the Lifesavers Credit Union in Bridgend, some firms were offering annual borrowing rates as high as a 177%.
She said: "Some of our members have come in and they have actually had letters saying 'We realise that you are a Farepak member, we would like to offer you an instant loan' and it's quite high interest rates. We haven't done thatShe said: "Some of our members have come in and they have actually had letters saying 'We realise that you are a Farepak member, we would like to offer you an instant loan' and it's quite high interest rates. We haven't done that
"That is unfair because they have already hit rock bottom and to offer them an extortionate loan does seem to be playing on their misfortune."That is unfair because they have already hit rock bottom and to offer them an extortionate loan does seem to be playing on their misfortune.
"But at the end of the day they are a business and they have to do what they feel is right for them.""But at the end of the day they are a business and they have to do what they feel is right for them."
'Morally wrong''Morally wrong'
MP Wayne David called for a tightening of financial regulations.MP Wayne David called for a tightening of financial regulations.
He said it was "morally wrong" for people who lost money in the Farepak collapse to be targeted by lenders.He said it was "morally wrong" for people who lost money in the Farepak collapse to be targeted by lenders.
Wayne David called for a tightening of financial regulations
He added: "Rather than trying to get business from people who are vulnerable, it would be better if they recommended people go to credit unions.He added: "Rather than trying to get business from people who are vulnerable, it would be better if they recommended people go to credit unions.
"There's also a need to increase financial literacy both among the general public and in young people in schools.""There's also a need to increase financial literacy both among the general public and in young people in schools."
Both the Welsh Assembly Government and the UK government have responded to Farepak's collapse by calling on major businesses to intervene.Both the Welsh Assembly Government and the UK government have responded to Farepak's collapse by calling on major businesses to intervene.
The Farepak Response Fund, which closed at the end of November, raised £6m for families affected.The Farepak Response Fund, which closed at the end of November, raised £6m for families affected.
The assembly government has provided funding for credit unions to offer loans to people hit by the collapse of the company.The assembly government has provided funding for credit unions to offer loans to people hit by the collapse of the company.
Lisa Haynes from Port Talbot said she and her family had had lost nearly £2,000 after the Farepak collapse.Lisa Haynes from Port Talbot said she and her family had had lost nearly £2,000 after the Farepak collapse.
Already a customer with one of the loan firms, Provident Financial, she said she had been offered more loans by one of the company's representatives.Already a customer with one of the loan firms, Provident Financial, she said she had been offered more loans by one of the company's representatives.
She claimed: "The agent asked me did I know anyone who would have been involved with the Farepak scandal and I said yes, myself, my mother and my sister.She claimed: "The agent asked me did I know anyone who would have been involved with the Farepak scandal and I said yes, myself, my mother and my sister.
"She was quick to say 'Would your mother like anything, would your sister like anything?'""She was quick to say 'Would your mother like anything, would your sister like anything?'"
But Provident Financial said it provided all its charges in a single up-front, fixed charge that customers saw from the start.But Provident Financial said it provided all its charges in a single up-front, fixed charge that customers saw from the start.
It has also denied targeting loans at Farepak customers but said that if an ex-Farepak customer wanted to take out a loan, it would be assessed in the usual way.It has also denied targeting loans at Farepak customers but said that if an ex-Farepak customer wanted to take out a loan, it would be assessed in the usual way.
The company added that more than half of its new customers came through recommendations from family and friends.The company added that more than half of its new customers came through recommendations from family and friends.
Christine Chapman, AM for the Cynon Valley, said: "If they can manage without taking any loans that would be the best advice but obviously a lot of people would not be in that situation".Christine Chapman, AM for the Cynon Valley, said: "If they can manage without taking any loans that would be the best advice but obviously a lot of people would not be in that situation".