The government must act to ensure the collapse of savings club Farepak "never happens again", a committee of MPs has warned.
The Treasury select committee said the case, in which more than 100,000 people lost over £43 million of Christmas savings, highlighted a "serious lack of consumer protection" in the industry.
In a new report on financial inclusion, it demands ministers, the Office of Fair Trading (OFT) and the Financial Services Authority (FSA) take decisive action by January to ensure people who invest in such clubs are properly protected.
The Department for Trade and Industry (DTI) has launched an investigation into the collapse of Farepak in October, looking at why it failed to ring-fence savers' money and whether it kept taking contributions when it knew it was in trouble.
A fund has also been set up to help those families affected, who lost an average of £400 each. Contributions have reached at least £5 million.
However, Treasury select committee chairman John McFall warned long-term action must be taken to ensure people are confident their savings will be protected.
"I want to see early action from the government, the Office of Fair Trading and the Financial Services Authority to consider how appropriate safeguards can be introduced to ensure that such a situation never happens again," he said.
The problem was that because savings put into the Farepak scheme would not be taken out again in money form - instead they were spent on Christmas gifts - they did not qualify as donations under the FSA's regulation guidelines.
As a result, there was no protection for its savers when the firm collapsed. Today's report warns: "The Farepak case has highlighted a serious lack of consumer protection which could have much wider implications for savings products of this kind."
Citizens Advice director of policy Teresa Perchard welcomed the committee's report, saying: "This scandal has forced thousands of families into difficult financial circumstances through no fault of their own and cannot be allowed to happen again."
Almost 140 MPs have now signed an early day motion put by former social security minister Frank Field calling on the HBOS bank to give the £30 million it has recovered from the "wreckage" of Farepak to the thousands who lost money, by Christmas.