New safeguards drawn up in the wake of the Farepak Christmas club collapse will protect savers in future, the Government said yesterday.

Christmas savings firms will ring-fence families' money so it is untouched if the companies go bust.

Consumer Minister Ian McCartney said savers could be confident the Farepak disaster would not be repeated.

Bolton families were among 150,000 who lost a total of £40 million in savings when the Swindon-based firm went into administration last October.

Brian Pomeroy, chairman of the Government's financial inclusion taskforce, yesterday published his review of Christmas hamper saving schemes.

In light of that review, Mr McCartney said customers' pre-payments would be held in ring-fenced trust accounts where they are protected if savings clubs or their parent companies go bust.

The industry-led scheme will be monitored by a new trade association.

Mr McCartney said the Farepak collapse had caused "untold stress" and financial worry to thousands of families before Christmas.

He said: "Ring-fencing contributions will ensure that customers' money can only be returned to customers and agents should the company go bust.

"Families will then be able to put something aside for Christmas in the confidence that their money is safe and there will never be another Farepak."

Farepak and its parent company, European Home Retail (EHR), went into administration on October 13, last year, after bankers rejected rescue proposals.

A report released by administrators BDO Stoy Hayward earlier this year said more than 113,000 victims and Farepak agents had put in claims totalling £39 million.

But victims will get just 4p to 5p back for every £1 they lost, the report predicted.

Savers' money had clearly not been ring-fenced by Farepak, the administrators said.