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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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 Post subject: Re: Guardian (merged)
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HBOS forced directors to continue collecting savers' deposits when it was clear Christmas savings club would go bust


A high court judge has accused bankers of forcing the collapse of the Farepak Christmas savings club by sucking it dry of millions of pounds of savers' hard-earned cash.

The court heard that HBOS forced Farepak's directors to continue collecting savers' deposits – cash which the bankers derided as "Doris money" – when it was clear that the savings club was going to go bust.

"HBOS knew that those deposits would be paid … and that the only beneficiary of those deposits would be HBOS," said Mr Justice Peter Smith.

The judge said that HBOS, which is now part of the bailed-out Lloyds Banking Group, did not break the law by taking £4m of savers' deposits when it was clear that Farepak was on the brink of collapse. But he added that the bank's behaviour "might not be regarded in the public's eyes as being acceptable".

In an extraordinarily impassioned speech delivered in open court after the collapse of a case against Farepak's former directors, Smith said he was not presiding over a "court of morality", but suggested HBOS should make amends to Farepak's savers by donating millions more to a distress fund.

The judge said Fraser Kelly, HBOS's head of corporate banking, had taken "almost a pride" in his "hardball" approach to getting the bank's money back from Farepak, part of a larger firm called European Home Retail, which also went bust.

Farepak's 116,400 savers, most of whom were low-income families, had no inkling that anything was amiss and continued to pay in £1m a week right up to the company's collapse in October 2006.

The savers eventually collected just 15p for every £1 they saved for Christmas, while HBOS's £31m loan was repaid in full.

The judge said HBOS could have saved Farepak from collapse if it had pumped in just £3m-5m more cash. "The unchanging attitude of the bank not to give anything during this period was the reason why the companies failed," he said.

Celebrities and supermarkets rallied round to help save the Farepak victims' Christmases. HBOS donated £2m to the fund in November 2006. But Judge Smith said HBOS "ought to make a further substantial payment to the compensation fund". But he added: " I cannot force them, it is entirely a matter for them."

A spokesman for Lloyds said: "The bank and its employees acted entirely appropriately throughout its relationship with European Home Retail plc. It made entirely reasonable decisions based on the information available to it at the time."

"On the matter of a contribution to the fund, we contributed £2m after Farepak collapsed and we will consider the comments that the judge made today."

Smith also criticised Vince Cable, the business secretary, for bringing the case against Farepak's former directors, including Sir Clive Thompson, a former president of the CBI and ex-chief executive of Rentokil.

Cable's attempt to bar the bosses of Farepak from the corporate world for up to 15 years collapsed on Wednesday when the Insolvency Service, which brought the case on Cable's behalf, was forced to abandon the case owing to a series of errors.

The judge said witnesses were forced to retract key evidence when it became clear they did not understand, and in some cases had not even read, their witness statements.

Judge Smith also criticised the Insolvency Service's lawyers for introducing witness statements that ran to 700 pages or, as the Judge said, "the size of a novella".

The collapse of the case is likely to cost the taxpayer about £20m in legal fees. A costs hearing will be heard next Friday, but it is expected that the Insolvency Service will be asked to pick up the bill for the legal costs of all the parties except Lloyds.

The taxpayer then faces the prospect of further multimillion-pound payouts in the future as Farepak's former directors are understood to be considering suing for damages to their reputations and loss of earnings.

Thompson told the Guardian that he is also planning to sue three MPs, including former Commons leader Jack Straw, for defamation after they publicly attacked him over the company's collapse. Shortly after the collapse Straw branded Farepak's demise a "truly scandalous situation" and said: "The more we find out about it the more, bluntly, it stinks."

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1969: Farepak starts selling Christmas hampers.

October 2006: Christmas hamper scheme Farepak collapses, taking nearly £40m of savers' money with it.

December 2006: A fund set up for victims of the collapse raises £6m. HBOS, the banker to Farepak's parent company European Home Retail, pays in £2m to the fund. The bank had faced criticism and the threat of boycotts over its response to the collapse.

June 2007: An inquiry is launched into the collapse of the firm and the behaviour of its parent company, European Home Retail.

November 2007: Over a year after the collapse, victims are still waiting for a payment date to be set. A report commissioned by Unison into the effects of the collapse on victims reveals the anxiety and depression suffered by many.

May 2008: An investigation by the Department for Business, Enterprise and Regulatory Reform is passed on to independent lawyers to see if the government will take legal action against the directors of Farepak.

September 2009: Nearly three years after the collapse of the firm, liquidators announce they have begun sending out compensation to some customers.

April 2010: Directors of Farepak are forced to pay £4m compensation to victims from their own pockets. The compensation is around 15p for every pound lost by creditors.

February 2011: It is announced that action will be taken against former Farepak directors, including Sir Clive Thompson. The accused face being barred from holding directorships.

October 2011: The fifth anniversary of the collapse of Farepak is marked by victims launching an online petition, demanding a discussion in the House of Commons.

November 2011: It is revealed that the fees for the administration have come to more than the compensation victims are waiting for.

January 2012: It emerges that more than 200 Farepak customers have died without receiving compensation.

June 2012: The case against former Farepak bosses collapses.

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Lloyds, the owner of HBOS, should compensate Farepak customers without delay. Photograph: Linda Nylind for the Guardian

It is embarrassing to say the least. A high court judge has said the actions of HBOS during the collapse of hamper company Farepak "might not be regarded in the public's eyes as acceptable".

Mr Justice Peter Smith also went as far to say HBOS should now contribute more than £2m to the distress fund set up after more than 116,000 Christmas savers lost out in 2006.

As a case to strike off the former directors of Farepak collapsed, the judge pinned much of the blame on the hard-nosed approach of HBOS bankers who could have saved the company with an extra £3m.

HBOS insists it acted properly at the time. Even so, the judge made a good point about the contribution to the distress fund which paid out just 15p in the £1 to the savers who lost out that Christmas. HBOS got back a couple of million of pounds from contractual entitlements while Farepak collapsed with £37m of losses.

Lloyds Banking Group, which now owns HBOS after the 2008 rescue bid, has already set aside £3.7bn to cover compensation and administration associated with payment protection insurance mis-selling. The judge conceded that the bank was not a "charity". But another couple of million to help the Farepak savers barely registers by comparison with the PPI scandal. To spare any further blushes, Lloyds should not spend a moment more "considering" the judge's comments about an extra contribution. It should pay up. And quickly.

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We want our 38 million back - not a couple of million - 38 million pounds!

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Here Here.

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Even Doris wants her money back from HBOS :shock: :D

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:lol: :lol: :lol:

pmsl @ john

just tryin to catch up on all this still

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:lol: :lol: Glad someone else is feeling the pain Sue. :lol: :lol:

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Farepak victims to receive 50p for every £1 saved

Money will be distributed to Farepak's 114,000 creditors at the end of August
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Jill Insley

guardian.co.uk, Tuesday 10 July 2012 12.13 BST

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Suzy Hall, national campaign co-ordinator of victim group Unfairpak, said the final payout was a good result. Photograph: Murdo Macleod


Savers who lost £37m through the collapse of the Christmas hamper company Farepak will receive final payments of 32p for every £1 they saved, the company's liquidators have announced.


The dividend payments, boosted by an £8m ex-gratia payment to customers and agents from Lloyds Banking Group, will be distributed to Farepak's 114,000 creditors at the end of August, almost six years after the company went into administration.


Creditors have already received 17.5p per pound saved from the Farepak Response Fund charity, set up by the then Department of Trade and Industry in 2006.


The combined payments mean the victims – mostly people on low incomes who regarded the Christmas savings scheme as a safe way to put money aside for presents and festive food – will receive a total of 50p for every pound they saved.


Suzy Hall, national campaign co-ordinator of victim group Unfairpak, said the final payout was a good result. "This is a much better outcome than we expected – to get 50p overall when we started with nothing in the pot, and then [were offered] just 4p for every £1. I'm extremely happy."


Farepak went into administration because its parent company European Home Retail could not secure a loan from creditors including HBOS, now part of the Lloyds Banking Group.


The announcement of an ex-gratia payment of £8m by Lloyds followed the collapse in June of a high court case against Farepak's directors taken by the Insolvency Service. The judge who heard the case, Mr Justice Peter Smith, was critical of HBOS, saying it had "played hardball" and refused to provide any positive assistance to solve the difficulties faced by Farepak.


"The bank had, as I have said, almost a pride in their strong attitude, but they went beyond that, of course, because they in effect forced the [Farepak] directors to carry on in September/October collecting deposits … at a time when they believed [Farepak would go bust]," he added.


HBOS made a £2m payment into the compensation fund just before Christmas 2006 when savers were meant to be receiving vouchers which could be redeemed in a range of shops or on hampers.


Although the winding up of Farepak represents the end of the story for those who lost money, campaigners are concerned there is still little protection for people saving through Christmas savings schemes and other similar savings products.


Members of Unfairpak and the Farepak Victims Committee will meet business secretary Vince Cable on 12 July to discuss the need for greater regulation in this industry.


As money paid into such savings schemes is used to buy vouchers, hampers and, most often, stamps, they are not regulated by the Financial Services Authority and deposits are not covered by the Financial Services Compensation Scheme.


The Christmas Prepayment Association, a trade association formed after the collapse of Farepak, requires its members to ringfence savers' money by putting it into trust. But high street retailers including Tesco, Sainsbury's and Morrisons have declined to join.


Hall said: "It is customers that keep businesses in business. Why, then, should the customers who use those savings schemes shoulder all the risk?"

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did you see they still have the photo of me holding that toy mega phone lol :mrgreen:

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