New protections for Christmas savings scheme customers

Many families spread the cost of Christmas by using festive savings schemes, paying in small amounts throughout the year to help avoid a big bill in December.

But until now, these schemes haven’t always offered the same level of protection as other ways of saving.

What’s changed?

Typically, Christmas savings schemes haven’t been regulated by the Financial Conduct Authority in the same way as banks and building societies.

And that means that customers could lose their money if the provider goes out of business.

But under the new law, Christmas savings schemes will have to:

• safeguard customer payments, so savings are kept secure
• be clear and transparent about where customers’ money is held
• explain how those savings are protected
• protect customers’ money even if the provider goes bust

So not only will people have greater clarity and protection, they’ll also have more confidence in the system.

Industry welcomes reforms

Park Christmas Savings has welcomed the new law, saying it reflects practices it has had in place for a long time.

Katherine Scott, director of marketing at Park Christmas Savings, said: “It’s reassuring to see these standards now applied consistently across the industry. 

What should customers do?

If you’re thinking about using a Christmas savings scheme:

• check the provider’s website for clear safeguarding information
• look for details on where your money is held
• make sure you understand what protections apply - and what don’t

For some people, these schemes can still be a helpful way to spread the cost of Christmas. 

But it’s important that you know exactly what it offers and how they differ from normal savings accounts, so you know you’re protected if something goes wrong.