More cash for Farepak customers

Share this article

Savers with collapsed Christmas hamper company Farepak are to get a cash windfall from Lloyds.

Lloyds Banking Group has now agreed to pay an extra £8 million to savers bringing the bank’s donations to the compensation fund to £10 million.

That is the same amont a High Court judge said HBOS - now Lloyds - “forced” Farepak directors to take from customers while the business was heading for the rocks.

A Lloyds spokesman said: “While HBOS acted legally in its dealing with the company, as the judge himself acknowledged, we are mindful that, in acquiring HBOS in 2009, the group took on not only its legal and financial obligations, but also wider responsibilities.”

Mr Justice Smith said last month the bank should seriously consider a further substantial contribution to the compensation fund.

He was speaking after a legal attempt to disqualify a Farepak director from running companies was withdrawn.

Mr Justice Smith said: “It seems to me that what happened here, whilst apparently legally acceptable, might not be regarded in the public eye’s as being acceptable.”

The judge said HBOS took a hard line with Farepak, forcing it to carry on trading and accepting customer deposits in the knowledge it was heading for insolvency.

During the final few weeks Farepak accepted £10 million from customers, all of which only benefited HBOS.

When it collapsed in October 2006 families - including several in Calderdale - lost money and faced a miserable Christmas. The bank was paid in full.

Business Secretary Vince Cable said his department and Lloyds would work to ensure the money goes to the victims as quickly as possible.

Mr Fowler sold his luxury penthouse at Kirklees Hall for a profit of more than £300,000 just before the collapse and moved down south.