A landmark change in consumer protection has come into force, safeguarding the money of millions of Britons who use supermarket loyalty and savings schemes.
What the New Law Means for Shoppers
From January 1, 2026, any business operating a consumer savings scheme is legally required to protect customers' money. This follows new legislation introduced in the wake of the 2006 Farepak scandal, where hundreds of thousands of families lost their Christmas savings when the company collapsed.
Companies must now either ring-fence the cash in a separate, independent trust account or take out specific insurance to cover the funds. This ensures that if a business faces financial difficulties, the money saved by customers is safe and will be returned to them.
Which Supermarket Schemes Are Covered?
The change affects popular savings programmes at some of the UK's biggest grocery chains. Shoppers using the following schemes can now have greater peace of mind:
- Iceland's Bonus Club: Offers a £1 bonus for every £20 saved.
- Tesco's Clubcard Christmas Savers
- Asda's Christmas Savings Card
- Sainsbury's Christmas Club Card
- The Co-op's Christmas Savings Stamps
The protection also extends to dedicated Christmas savings clubs like Park Christmas Savings. These schemes allow customers to set aside money throughout the year, often receiving a cash bonus of up to 6% as a reward for their savings discipline.
A Lasting Legacy from Farepak
The driving force behind this long-awaited legislation is the memory of the Farepak collapse nearly two decades ago. The new rules are designed to prevent any similar tragedy, where families lost their entire festive savings overnight.
For the first time, money placed in these supermarket savings schemes is no longer at risk if the retailer encounters trouble. This represents a significant step forward in consumer savings law and financial security for households across the country who rely on these methods to budget for Christmas and other big expenses.
