MP calls for probe into bank Farepak role
SNP Business and Enterprise spokesperson Mike Weir MP has called for an investigation into the role of HBOS in the collapse of the Christmas saving club Farepak following a ruling by the Mr Justice Smith this week - who cleared the company directors and criticised the bank for taking in over £10m in depositors' money in the knowledge that the company was heading for insolvency. The money later went towards paying down debt held by HBOS.
Mr Weir, who has campaigned for the victims of the collapse to secure compensation, received confirmation from the firms liquidators that 207 agents and customers of the Christmas saving scheme have died since the collapse six years ago.
Farepak collapsed in October 2006 owing £37m to more than 119,000 savers (20,000 customers in Scotland). More than five years later, savers are likely to recover just 15p in the pound, while the final bill for the administrators and their legal advisers has already exceeded £8 million. It is understood that the UK Government will now meet the costs of the company directors who have been cleared - costs estimated as much as £6million.
Mr Weir said:
“The ruling by Mr Justice Smith raises serious questions over the role of HBOS in the collapse of Farepak. With the UK Government now set to meet the costs of company directors while the victims of this collapse are still to receive any of their money back we need an investigation into the events that led to the collapse of Farepak.
"It is sad and unacceptable that, six years after Farepak collapsed, more than two hundred customers have died waiting to receive any of their money back. That nightmare of Christmas past is still being felt by many low income families. Savers are likely to recover just 15p in the pound, while the final bill for the administrators and their legal advisers has already exceeded £8 million.
“UK Ministers should step in without further delay and bring this sorry tale to an end and ensure that the Farepak savers get justice."
In a letter Farepak’s liquidator (BDO LLP) confirmed: “To date, I have received notification of the death of 207Farepak agents and customers. I can confirm that any dividends will be paid to the next of kin or , where applicable, the estate of the agent or customer.”