The Government will spend £1 million in heightening consumer awareness of Christmas saving plans, as a Treasury report, prompted by the collapse of Farepak last year, found that policymakers and regulators had no knowledge that such schemes existed.

The report, undertaken by Brian Pomeroy, chairman of the Treasury's Financial Inclusion Taskforce, also recommended that the Department of Trade and Industry must "urgently ensure" that hamper scheme companies have secure arrangements in place to protect the payments that customers make over the months leading up to Christmas.

Farepak went bust in October last year after it lent £33 million, made up of customers' Christmas savings, to its parent company, European Home Retail, which then collapsed when its bank, HBOS, pulled the plug on the business, leaving 126,000 low-income families out of pocket.

The Times revealed yesterday that HBOS was launching its own festive savings product, aimed at helping people on low incomes to save for Christmas.

Customers of the new Halifax Christmas Savings Account will be able to save between £5 and £100 a month and earn 5.2 per cent interest.

The bank is trialling the new product through a mailing to 10,000 low-income customers beginning in May.

At the end of the scheme in October, customers will be offered the choice of cash or shop vouchers.

However, Suzy Hall, the UK co-ordinator of Unfarepak.com, said that HBOS had “an extraordinary cheek”.

She said: “I’m astonished that HBOS is now getting into the very business it helped destroy. I would not expect Farepak customers to want to save with HBOS.”

HBOS said, “We’re just trying to do the right thing. No bank has produced an account of this type before.

"Customers will have the peace of mind that the Halifax stands behind this product.”

Savers with Farepak, which was scheduled to issue them with hampers or vouchers before Christmas, lost out because their money was not ring-fenced.

They lost an average of £277 each.

Charitable donations have compensated them about 17p in the pound so far, and, in the liquidation, they should receive another 5p in the pound in due course.

HBOS is one of the biggest providers of social banking accounts — accounts with no overdraft facilities that are offered to people with low incomes or tarnished credit records.

It has 3.6 million such accounts.

The report today also stated that the Government should encourage groups such as the Post Office and credit unions to enter the Christmas savings market and find ways of attracting "hard-to-reach customers".

Mr Pomeroy also said that the Government and its relevant agencies needed to make themselves aware, and be informed of, all methods of saving and the risks associated with consumer protection.

The Treasury will spend £1 million in explaining various scheme options to consumers.

The Office of Fair Trading is examining the competition issues in this market, which is dominated by one company that controls 90 per cent of the industry, according to Mr Pomeroy's report.

The Department of Trade and Industry is examining the reasons for the collapse of Farepak.

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