207 Farepak victims dead and still no payout

Published on Sunday 22 January 2012 00:00

A SCOTTISH MP has called on the UK government to speed up compensation for Farepak customers after it emerged more than 200 have died since the Christmas hamper scheme collapsed five years ago.

Mike Weir, SNP spokesman on consumer affairs, said liquidators BDO Stoy Hayward had confirmed in a letter that 207 have died since the 2006 collapse without compensation.

It said dividends would be paid to next of kin or the estate of the agent or customer.

Around 122,000 customers made claims worth £38 million when Farepak went into administration in October 2006, losing an average of £400 each. Weir, MP for Angus, said around 20,000 of those were from Scotland.

Many of those affected by the collapse of Wiltshire-based firm were on low incomes. Customers paid in monthly sums to the firm or its agents to receive food hampers for Christmas.

In 2009, payments worth £240,000 were sent to 5,900 customers whose money was put into trust by the firm just before it went into administration. The compensation was paid after a court was asked to rule whether the trust, which was not set up properly, actually existed and who should be reimbursed.

Those who placed orders before the cut-off date were unaffected by the ruling and victims were told to expect just 5p for every £1 spent.

Weir said: “It is sad and unacceptable that, five years after Farepak collapsed, more than 200 customers have died while waiting to receive any of their money back.

“There is something seriously wrong when liquidations can take years to finalise and people are dying before the insolvency gravy train comes to a halt.

“It is five years since Farepak collapsed, but that nightmare of Christmas past is still being felt by many low-income families. Savers are likely to recover just 5p in the pound, while the final bill for the administrators and their legal advisers has already exceeded £8m. It is disgraceful that, years after the company collapsed, customers are still waiting to get any of their savings back.

“Just like the banks, current UK insolvency regulation has failed. Part of the problem seems to be that the industry is largely self-regulated. Insolvency work is handled by licensed practitioners, most of whom work for accountancy firms.

“The practitioners are in turn regulated by accountancy and law professional bodies, which have no independence from the firms they regulate. What’s more, there is no independent complaints investigation procedure or ombudsman to adjudicate on malpractices – there are no questions over fees or delays.

“UK ministers should step in without further delay to bring this sorry tale to an end and ensure that savers receive a reasonable return rather than their money going to swell the already bulging pockets of large accountancy firms.”