A MAJOR bank said yesterday it had already refunded £100,000 to customers caught up in the Farepak fiasco.

Lloyds TSB announced that it would reimburse customers who made payments to the collapsed Farepak Christmas club using the bank’s credit or debit cards.

The news came as Dundee West MP Jim McGovern backed calls for a full inquiry into the Farepak collapse and sought better regulation of Christmas savings clubs.

Paul Pester, managing director of consumer banking at Lloyds TSB, said, “We always protect our customers when they use their debit or credit cards for purchases. If they don’t receive the goods they have paid for we will refund the payments and we are happy to be able to do this for our customers who have made payments to Farepak using our debit or credit cards.

“To date, we have refunded more than £100,000 to customers who lost money relating to the collapse of Farepak.

“In addition, we would urge customers not to rely on unregulated deposit takers for their savings but save with a bank or credit union.”

Customers of the bank who have made contributions to Farepak using their Lloyds TSB debit or credit cards are urged to write to the bank with details of the dates and amounts of any payments made to Farepak.

Letters should be addressed to: The Farepak team, Lloyds TSB Debit Card Services, 7th Floor, Essex House, Southchurch Avenue, Southend-on-Sea. SS1 2LB.

Meanwhile, Mr McGovern was keen to emphasise that whilst an investigation into how Farepak was run and the role of HBOS is crucial, even more important is finding a way to ensure that this industry is better regulated.

This would ensure that customers’ savings were protected and couldn’t be “swept upstairs,” as Farepak had done with funds.

“With the Queen’s Speech approaching all of us are considering our legislative priorities,” he said. “Personally I would like some form of increased regulation for the Christmas savings’ market.

“This will obviously involve an investigation first and I understand that John McFall, chairman of the Treasury select committee, is prepared to instigate this.

“Reports suggest that Farepak was slipping into trouble in 2005. Their parent company EHR were ‘sweeping upstairs’ money out of Farepak’s accounts and into the EHR accounts.

“Regrettably this was 100% legal.”

Mr McGovern wants to see a new system of regulation, possibly one that treats Christmas savings schemes such as Farepak as a financial product.

“Treating Christmas savings schemes as financial services would enable them to be regulated by the Financial Services Authority (FSA).

“Whilst this may not be a perfect solution it would provide a much tighter level of security for all our constituents if they decide to invest in these sorts of savings schemes in the future,” he said.

“In addition, it is important that we engender a sense of trust in these schemes.

“Only by properly regulating these schemes can we guarantee that these people will not be tempted into the hands of unscrupulous loan sharks and doorstep lenders.

“I hope that we will act quickly on these issues. We need to find out what went wrong with Farepak and then work out how to ensure this sort of mismanagement and bungling is never repeated again.”