The failure of Farepak, the hamper company, has dented confidence in savings schemes among people on low incomes, MPs warned yesterday.

John McFall, chairman of the Commons Treasury committee, said that the Farepak collapse would hit consumer confidence in long-term savings just as the government was encouraging people to save for their retirement. "This will have an impact on confidence in long-term savings," he said. "It will deter people on low incomes from saving even though people will argue Farepak was not a financial product."