The Saga of Farepak
It was back in the autumn of 2006 that the Farepak Company went bust. Just a few months before Christmas, the company which specialised in Christmas Food Hampers, gifts and high street shopping vouchers, went into administration. About 70,000 people did not receive their hampers for Christmas, even though they had been putting money aside for a number of months.
Often, it was less well-off people who lost out and many of them were people from the South Wales Valleys, including the Rhymney Valley. Most of Farepak’s savers had no inkling that anything was wrong with the company and they continued to pay £1 million right up to the company’s collapse.
Eventually, after a lot of hard lobbying and ‘to-ing and fro-ing’, the savers were given ‘compensation’. However, they received just 15p for every £1 they had saved. Celebrities and supermarkets rallied around to help the Farepak victims but, overall, this did little more than soften the blow that many hard-pressed people were feeling just before Christmas.
Recently a court case against the Directors of Farepak collapsed, even though it had been brought forward by the Government’s Business Secretary, Vince Cable. His attempt to ban the bosses of Farepak from the business world came to nought because of a series of errors in the how the case was presented.
But what was also significant was that the High Court Judge accused the Bankers of HBOS of sucking Farepak dry of millions of pounds of savers’ cash. Although HBOS did not break the law, the Judge made clear that HBOS were fully aware of Farepak’s problems and that HBOS could have saved Farepak if it pumped-in just £3m to £5m in cash.
Moreover, the bank knew full-well that as the company moved to administration, the money paid in by savers would go to the bank rather than towards their hampers.
There are many lessons to be learnt from this sorry saga which hit so many people in this area so very hard. Yet again, the case has highlighted how our banks have been allowed to behave in a totally anti-social manner. Often, people seem to think that banking is an issue of interest only to businessmen and the City of London; the case of Farepak shows that the way the banks behave ultimately affects us all, albeit in different ways.
Wayne David
Labour MP for Caerphilly
Surely the one thing it does show us is that people should only save through schemes with a credible insurance/guarantee backing. Which seems to imply a lack of regulation more than anything else.
Banks will behave as banks regardless of our moral outrage. When compared to hounding debtors to the point of suicide, stealing Christmas is perhaps not so shocking. Neither is driving businesses in to the ground new territory for them.