Farepak victims to receive 50p for every £1 saved:
Money will be distributed to Farepak's 114,000 creditors at the end of August
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?"
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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