Customers who lost their savings when the Christmas catalogue company Farepak went bust have been expressing their disgust over the amount of compensation that Northern Rock customers are set to receive, when they were left with no money for Christmas and little recompense for their loss.
This week marked the one year anniversary of the Christmas hamper and voucher provider going into liquidation and taking the savings of 300,000 families with them, totalling approximately £38 million.
Despite being prudent with their money and saving it up using Farepak’s scheme, many faced a scant Christmas last year as the company’s overdraft was called in by HBOS and they couldn’t put up the cash. Prior to administrators being brought in, Farepak continued to receive payments from unsuspecting customers in an attempt to pay off its debts, while encouraging customers to “Give your family the best Christmas ever.”
Unlike customers of Northern Rock, who have a guarantee from the Financial Services Authority for all of the first £2,000 and 90 per cent of the next £33,000 they had invested with the bank, Farepak offered their customers just 5p in every £1 they had saved in compensation.
As yet, Farepak’s customers have not received any refunds from the company, but, according to the firm’s website, and contrary to reports which suggest that as ‘savers’ their customers are not entitled to any kind of compensation, they are, in fact, classed as ‘creditors’ and are therefore “entitled to claim against the company and will receive a dividend when one is paid.”
They have received some compensation, in the form of donations from companies and individuals that took pity on their plight. HBOS donated £2 million as a result of their part in contributing to the unfortunate situation, and a further £3.8 million came from individuals and companies that sold vouchers through the Farepak scheme, such as Tesco and Argos, resulting in customers receiving 15p for every £1 they had saved.
Despite being prudent savers, many of Farepak’s customers – mostly women who were using the scheme to help manage their finances – have been forced into debt in order to afford their families the Christmas they were promised.
In light of the loss felt by customers who feel they have been swindled out of their money and have not been dealt the justice they deserve, it has been argued that regulatory procedures are not strong enough and that more needs to be done in order to protect consumers from facing similar situations in the future.
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© Fair Investment Company Ltd