Banking News Farepak Directors Could Face Prosecution 1572
Farepak directors could face prosecution
14 May 2008 / by Rachael Stiles
Thousands of people lost their Christmas savings when Farepak went bust in October 2006, and campaign groups have voiced anger over the government guarantee offered to customers of traditional savings accounts when Farepak’s customers have been told to expect to get back just five pence for every pound saved.
The Companies Investigations Branch (CIB) of the Department of Business, Enterprise and Regulatory Reform has completed an official investigation into the company, which has revealed that the CIB is considering taking legal action against the directors and accountants of Farepak, which left 150,000 people short of almost £40million which they had saved up for Christmas presents and food.
Gareth Thomas, the consumer minister, acknowledged that “The collapse of Farepak was dreadful for the thousands of people who lost money.” and that “The Government is working hard to prevent other families suffering similar problems in the future.
“We initiated a comprehensive investigation to establish the facts. We are now getting legal advice on whether there are grounds for further action.” he said.
Farepak’s customers were particularly enraged when Northern Rock’s savings customers were given a guarantee for their savings when it experienced the first run on a British bank in more than 100 years last summer.
Commenting on the completion of the investigation, Lorely Burt, Liberal Democrat small business spokesperson said:
“There is an obvious inequality between the protection given to people who save with high street banks and those who put their money into schemes such as Farepak. If any wrongdoing can be proved, ministers must ensure that those responsible are brought to book.
“In these harsh economic times, when food and fuel prices are skyrocketing, it is crucial that the rules are tightened to ensure small savers are never again left high and dry in this way.”
© Fair Investment Company Ltd