‘There will never be another Farepak’

From the archive, first published Wednesday 28th Mar 2007.

Hard-up families who lost money when Christmas hamper firm Farepak collapsed have been promised it will never happen again.

The Government has announced new safeguards to prevent a repeat of the Farepak "nightmare" which led to some 150,000 families nationwide losing £40 million of savings when the company went bust last autumn.

The Telegraph & Argus can reveal for the first time that at least 110 agents in Bradford lost money, which they had collected from friends and neighbours during 2006.

In addition, there were 45 agents in Keighley and 11 in Shipley.

Each agent may have collected payments from just one person or as many as several dozen.

In the wake of the Farepak collapse, the Government set up the Farepak Response Fund which, run by charity The Family Fund, raised £8 million to pay for vouchers and hampers for the victims.

Now the Government has announced that, in future, Christmas savings firms will ring-fence families' money in trust accounts so it is untouched if the companies go bust.

The industry-led scheme will be monitored by a new trade association.

Consumer Minister Ian McCartney said savers could be confident the Farepak disaster, which had caused "untold stress" and financial worry to thousands of families before Christmas, would not be repeated.

He said: "Families will then be able to put something aside for Christmas in the confidence that their money is safe and there will never be another Farepak."

Publishing a review of Christmas hamper saving schemes, Brian Pomeroy, chairman of the Government's financial inclusion taskforce, said the Farepak debacle had been a "nightmare".

Farepak and its parent company, European Home Retail, went into administration on October 13 last year, after bankers rejected rescue proposals.

A report released by administrators BDO Stoy Hayward earlier this year predicted victims will get just 4p to 5p back for every £1 they lost.

The Government's Companies Investigations Branch is still examining the circumstances of the firm's collapse.