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Farepak bosses may face MPs quiz | Farepak bosses may face MPs quiz |
(about 9 hours later) | |
The head of the company that owns collapsed Christmas hamper firm Farepak and its bankers may be quizzed by MPs. | |
Labour MP Jim Devine has asked the Commons Scottish Affairs Committee to formally question the parties. | Labour MP Jim Devine has asked the Commons Scottish Affairs Committee to formally question the parties. |
Earlier, the group's chairman, Sir Clive Thompson, blamed Halifax Bank of Scotland for the firm's collapse. HBOS rejected the claims. | |
Swindon-based Farepak went into administration in October without offering compensation. | Swindon-based Farepak went into administration in October without offering compensation. |
An estimated 150,000 customers - mainly on low incomes - have lost an average of £400 each through Farepak's collapse, although some have lost closer to £2,000. | An estimated 150,000 customers - mainly on low incomes - have lost an average of £400 each through Farepak's collapse, although some have lost closer to £2,000. |
More than 100 Farepak savers attended a meeting in West Lothian on Sunday with Mr Devine, the MP for Livingstone. | |
Mr Devine says he wants Sir Clive and HBOS to "stand in front of Scottish MPs to answer questions we all want to hear". | |
'Hung out to dry' | 'Hung out to dry' |
Sir Clive told the Sunday Telegraph HBOS refused to support Farepak because of a £1.5m funding shortfall. | |
They're not considered financial products so the Financial Services Authority doesn't regulate them Ed Vaizey, Conservative MP | They're not considered financial products so the Financial Services Authority doesn't regulate them Ed Vaizey, Conservative MP |
He told the paper Farepak's management had been "hung out to dry" by HBOS. | |
He also said the bank rejected five proposed rescue packages between May and October. | He also said the bank rejected five proposed rescue packages between May and October. |
An HBOS spokesman said Farepak's requests for the bank to "ringfence" savers' money were not serious. | |
There was no money to ringfence, because the money was used as working capital by Farepak's owner European Home Retail (EHR), he said. | |
HBOS provided an overdraft facility to EHR, and the decision not to extend the overdraft eventually led to administrators being called in. | |
'Very saddened' | |
The Department of Trade and Industry has launched an investigation into what happened at Farepak. | The Department of Trade and Industry has launched an investigation into what happened at Farepak. |
A fund has also been set up to help the thousands of families affected. Firms that have promised to donate money include HBOS, Christmas hamper supplier Park Group and Marks & Spencer. | |
Paul Munn, a non-executive director of EHR, told the BBC the board had made "strenuous efforts" to tackle the problem, adding: "Clearly, we're very saddened by the situation. | Paul Munn, a non-executive director of EHR, told the BBC the board had made "strenuous efforts" to tackle the problem, adding: "Clearly, we're very saddened by the situation. |
"No-one likes to see any company fail or let its customers down. That's absolutely to be regretted." | "No-one likes to see any company fail or let its customers down. That's absolutely to be regretted." |
Rules questioned | |
Farepak agent and customer Debbie Black said she thought the company bore the ultimate responsibility for the situation. | Farepak agent and customer Debbie Black said she thought the company bore the ultimate responsibility for the situation. |
"At the end of the day we are putting our trust in Farepak and the parent company EHR and our money should have been safeguarded by them - they shouldn't rely on the bank to make safeguards. | "At the end of the day we are putting our trust in Farepak and the parent company EHR and our money should have been safeguarded by them - they shouldn't rely on the bank to make safeguards. |
"It should be down to the directors of the company to do it anyway." | "It should be down to the directors of the company to do it anyway." |
Meanwhile, Conservative MP Ed Vaizey said he was unhappy about the rules governing clubs such as Farepak. | Meanwhile, Conservative MP Ed Vaizey said he was unhappy about the rules governing clubs such as Farepak. |
"They're not considered financial products so the Financial Services Authority doesn't regulate them," he said. | "They're not considered financial products so the Financial Services Authority doesn't regulate them," he said. |
As a result, if such a company fails, it does not have to compensate its customers, he added. | As a result, if such a company fails, it does not have to compensate its customers, he added. |