Money News: Banks told to show spirit of Christmas to Farepak savers or risk playing Scrooge

UK banks and financial services firms that fail to contribute to the compensation fund of the collapsed Christmas savings club Farepak risk "serious damage to the reputation of the whole finance and retail industry".

The warning was issued in a letter to the British Bankers' Association from the Labour MP John McFall, who heads the Commons Treasury Select Committee.

Mr McFall called on the BBA to encourage its members to chip in to the Farepak Response Fund, setting a deadline of Wednesday this week.

Many of Farepak's customers were pensioners and families on low incomes, who saved monthly with the company throughout the year in return for Christmas hampers and shopping vouchers.

Farepak went into administration a month ago, owing more than 120,000 customers some £40m when it filed for insolvency.

In his letter to the BBA, Mr McFall said: "I am writing to you in regard to the Farepak crisis and the fact that a fund exists to lessen its impact on thousands of people who can ill afford to be left without their hard-earned savings at this time.

"We don't want people comparing the banks to Ebenezer Scrooge, who was finally persuaded to make Christmas merry for the Cratchit family and Tiny Tim."

Mr McFall pointed out that several banks and financial services companies - including the Nationwide building society, Alliance & Leicester, HBOS, Barclays and the Co-op Bank - have already contributed to the fund, which now totals around £5m.

But he said this was an issue for the whole financial services industry and that so far "the majority have made no goodwill gesture at all".

He warned that companies' failure to act could cause "serious damage to the reputation of the whole finance and retail industry".

"Action now - even at this eleventh hour - would help to ameliorate the worst effects of this sorry episode, which has all but ruined the coming festive season for so many families."

There was no prospect of compensation for the victims until well after Christmas, Mr McFall added.

The Department of Trade and Industry is to investigate the collapse of Farepak and determine whether consumers investing in savings clubs need more legal protection.

Mortgages: FSA issues first fine for cold calling

The Financial Services Authority levied a £17,500 fine on Capital Mortgage Connections for flouting rules governing the sale of home loans, including a ban on cold calling - the first time the City watchdog has taken action against a firm on these grounds.

CMC was fined as a result of breaches that included making unsolicited phone calls. An FSA investigation found that 85 per cent of the mortgage broker's business was generated by cold calling potential customers.

"Cold calling for mortgage business is against our rules, and firms operating in the industry should be aware of this," said the FSA's head of enforcement, Jonathan Phelan.

"This is the first time we have taken steps against a firm for undertaking this activity and we will continue to monitor the market for instances of cold calling."

The fine imposed on CMC also related to its failure to treat its customers fairly after it was unable to demonstrate that it had given appropriate pricing information on the accident, sickness and unemployment (ASU) insurance policies it sold.

More than 97 per cent of ASU policies sold by the firm were on a single premium basis. CMC could not prove that it had advised its customers of potentially cheaper monthly-premium options, or that it had given them suitable pricing information.

Mr Phelan also cited CMC's inability to establish and maintain appropriate systems and controls.

A spokesman for CMC said: "We didn't think we were cold calling - we thought it was market research. We were the ones who told the FSA what we were doing."

He added that CMC has since ceased cold calling.

Pensions: EOC says reform won't close gender gap

Women will continue to face financial hardship in retirement despite government proposals to reform the private and state pension system, according to a new report from the Equal Opportunities Commission (EOC) and Scottish Widows.

The commission found that the UK pension system will still discriminate against women, with those who are self-employed, or who spend long periods caring for others, particularly hard hit.

The Government is planning that workers should be automatically enrolled into a new personal account scheme, to which they, their employer and the state will be compelled to contribute. But findings from the Pensions Policy Institute, included in the report, show that if these plans are given the go-ahead, men are likely to build "significantly higher pensions than women".

A woman employee earning the median income who saves from age 22 to 65 could receive only 69 per cent as much from a personal account as a man earning an equivalent amount, the report suggested.

"Our current system needs to start taking into account the fact that many women will not work full time continuously throughout their working lives, with many taking time out to have children or care for dependants," said Ian Naismith, spokesman for Scottish Widows.

Irregular working patterns mean that women lose out on state and private pensions, and many are unable to build up funds to generate a sufficient income in retirement.

The EOC report shows that nearly a third of women have no private pension provision and that half stop saving for retirement when they have children.

And due to ongoing caring responsibilities, women are far more likely than men to have lower-paid, part-time jobs. Even when contributing to an occupational pension scheme, they pay in less on average than their male counterparts, according to the report. It shows that men save on average £199 a month towards retirement, while women save only £128.

House prices: Market heading for a fall, warns economist

The housing market could go bust within the next few years, according to David Miles, chief UK economist at the investment bank Morgan Stanley and a former adviser to Gordon Brown.

Mr Miles - who in 2003 published a report for the Chancellor looking at Britons' distaste for long-term mortgages - warned that either a fall in values or a long period of flat prices was likely over the next few years.

House price growth, he said, has been grounded in unrealistic expectations of double-digit annual rises, with the current demand for housing fuelled by people's confidence that rapid price rises will continue.

Once prices fail to meet expectations, the bubble will burst and "significant" falls are likely, he said.

Mr Miles's predictions come as mortgage lenders such as Abbey and the Co-op Bank have begun offering standard home loans of five times borrowers' salary to help the growing number of first-time buyers who are being priced out of the market.

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