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Unfairpak Forum - How Farepak Stole Christmas • View topic - Guardian (merged)

Unfairpak Forum - How Farepak Stole Christmas

On Friday 13th Oct 2006 - Farepak Hampers went into administration. Over 100,000 customers were told that no food hampers or vouchers or other goods will be supplied this Christmas as promised, and no refunds! Share your thoughts here...
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PostPosted: Mon Oct 30, 2006 10:54 pm 
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http://business.guardian.co.uk/story/0,,1935390,00.html


MP attacks bank over Farepak collapse


Tony Levene
Monday October 30, 2006
Guardian Unlimited


Maverick Labour MP Frank Field has called on high-street bank HBOS to recompense savers who lost money in the Farepak Christmas hamper collapse.
He says the bank should have pulled the plug on Farepak long before it went into adminstration on October 13 - that would have saved the money of 150,000 customers, including many of his Birkenhead constituents.

He claims HBOS, which handled corporate accounts for Farepak and parent company European Home Retail, took £40m from Farepak customers to reduce overall group debt. Farepak savers are owed £50m - typically £400 each but some have lost £2,000 or more. They are likely to get back only a few pence in the pound, if that, from the administration process.


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Customers say their savings boosted EHR finances rather than buying the hampers and store vouchers they ordered.
In an early day motion, a parliamentary device often used to draw attention to constituency problems, Mr Field stated: "This House draws attention to the pivotal role HBOS has played in the collapse of Farepak, the Christmas savings scheme, whose bankruptcy blights the Christmas of half a million decent people, many of whom have been saving since January of this year."

The EDM further notes "that HBOS allowed Farepak to continue trading whilst it clawed back something like £1m a week of people's savings to offset the company's overdraft with the bank".

The EDM calls on HBOS to "make good quickly the savings of decent citizens, carefully saving money with Farepak, to offset the extra costs of Christmas".

Mr Field told the Guardian that October was the cruellest month for HBOS to pull the plug and appoint adminstrators.

"People were expecting their hampers and shopping vouchers now. HBOS could have done this back in January before savers started to put their money in.

"There have been opaque transactions between Farepak and parent EHR for nearly two years. The bank must have had doubts ages ago - it could have called in its overdraft earlier this year and ended Farepak - the loss would then have been less.

"If HBOS didn't know they were taking Xmas savings from poorer people, then they were either fools or knaves - let them choose which. A goodwill gesture now could clear the air rather than wait for the Department of Trade and Industry investigation," he added.

The bank rejected Mr Field's understanding of the process and will not compensate customers.

In a statement, which ignores the plight of Farepak consumers, it said: "We have been very supportative of the business and have shown great flexibility in recent months. We have accommodated the company on many occasions to allow management every opportunity to find a solution to its financing challenge."


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just said in another thread. i like this MP he talks great sense, maybe we should send this article to all our MP s PM and any one else we can think of

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be a piece in sat guardian just done interview

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Well done :lol: :lol: :lol:


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http://business.guardian.co.uk/story/0,,1945387,00.html


Severin Carrell and Rebecca Smithers

The Guardian, Saturday 11 November 2006
Article history



The following correction was printed in the Guardian's Corrections and clarifications column, Tuesday November 14 2006

HBOS is the Halifax Bank of Scotland, not the Halifax Royal Bank of Scotland as we had it in the article below. The Royal Bank of Scotland is an entirely separate bank.



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Customers of the collapsed Christmas savings company Farepak could have lost up to £120m, MPs claimed last night, increasing pressure on ministers for tighter regulation of the savings club industry.

Labour backbenchers believe the scale of the Farepak scandal is far more dramatic than realised, with more than 300,000 low-waged and unemployed families, and pensioners, losing their Christmas money - double the current estimates. Some families lost up to £1,400 when the Swindon-based savings company went into liquidation a month ago, and are now facing a miserable festive season. Most have been forced to borrow money from credit unions, take out loans, or scale down their plans for Christmas.

Jim Devine, Labour MP for Livingston in West Lothian, has been inundated with constituents who have been affected. About 100 people went to a public meeting in his constituency last week, who between them lost £100,000. Initial estimates suggest that between 100,000 to 175,000 people had lost between £37m to £46m when Farepak collapsed last month.

It used a network of 25,000 local agents to recruit savers, with those agents earning a commission of up to 2.5% or up to 25% off Christmas hampers. A pensioner with 57 grandchildren and great-grandchildren said she feared her family's Christmas would be ruined. Mother-of-12 Sylvia Futcher, 75, from Evercreech, Somerset, lost £1,500 when the company went under, including commission for working as an agent. The firm's administrators, at BDO Stoy Hayward, were stunned to discover that Farepak held no detailed records of how much money it held and confirmed yesterday that it had no list of customers' names. It is now trying to reconstruct Farepak's finances - partly by asking customers to lodge claims for repayment. But Mr Devine said he believed the true figures at stake were probably double the official estimates.

He believes the 25,000 agents actually recruited an average of between 10 to 15 friends, family members and neighbours, who then saved an average of between £400 and £500 each. He knew of one agent who had 31 customers and lost £12,500. "We could be looking at anything upwards of 300,000 people affected. That's much more accurate than the figures of 120,000 or 150,000, and it could be as high as half a million people. That would make their losses anything from £65m to £120m."

Frank Field, Labour MP for Birkenhead, said next week was "crunch time" for individuals if they are to receive their refunds by Christmas. Mr Field is among those strongly criticising the role of Halifax Bank of Scotland (HBOS) in the company's collapse, and urged it to make up the shortfall needed to compensate families. He and other MPs believe the scale of the disaster could have been avoided, and blame its parent company's bank, HBOS, and its administrators for failing to act sooner. Fifty-five MPs have signed his early day motion "drawing attention to the pivotal role HBOS has played in the collapse of Farepak".

High street stores and banks such as Argos and Marks & Spencer, many of which sold vouchers through Farepak, have donated £4.25m to an appeal fund set up by the Department of Trade and Industry last week - including £2m from HBOS. The charity overseeing the appeal, Family Fund, has also received £11,500 in individual donations from the public. That money will be distributed to the worst-off Farepak customers this month. Financiers were first aware that its parent, European Home Retail (EHR) was in trouble last year. It was put into administration in April, yet Farepak was allowed to continue taking its customers' money until it went into administration on October 13.

MPs alleged in the Commons this week that EHR was "siphoning off" the money paid into Farepak to meet its own debts. Mr Devine said he believed the Serious Fraud Office should investigate, in addition to the Department of Trade and Industry's inquiry announced this week.

Concerns have also been raised about the millions of pounds in salaries and bonuses paid to the directors of EHR before its collapse. They include Sir Clive Thompson, 63, chairman of EHR and a former president of the Confederation of British Industry, described as "a modern-day Scrooge" by Labour MP Anne Snelgrove.

A spokeswoman for the administrators said early indications were that each agent only attracted an average of about £1,500 in customers' savings. "We're still receiving claims from customers - that's how we'll be able to get a better idea of the numbers."

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There are some interesting figures here (as someone else posted earlier).



I am not financially trained, but it looks as if turnover in 2004 was £68 million and in 2005 was £81 million (which would cover Christmas 2004.).

Farepak does a bit of contract packing, but most of its turnover is via Agents.

So the 2006 figure could well be pushing £100 million.

The other interesting figure is that £17 million is owed to Farepak Ltd by the Group in April 2005.


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