Farepak: MP hoping for court action

Date article online: 13/05/2008

Farepak directors who left hundreds of Rochdale savers facing a bleak Christmas after they lost thousands of pounds could face legal action, the Government has hinted.

Consumer Minister Gareth Thomas said the official investigation into the firm by the Companies Investigations Branch (CIB) of the Department for Business, Enterprise and Regulatory Reform has been completed.

As expected, it will not be published, but what may comfort some of the savers who lost out when the Christmas saving scheme went bust in October, 2006, is that the directors could face prosecution.

In a written ministerial statement, Mr Thomas said the CIB was taking independent advice on whether the evidence in its report warranted legal action.

He said: “The collapse of Farepak was dreadful for the thousands of people who lost money. 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.”

An estimated 150,000 people across the country lost up to £40 million when Farepak went bust, including hundreds of Rochdale families who had made regular payments into the scheme.

Milnrow & Newhey MP Phil Woolas said: “It is very difficult to say anything in advance of possible legal action but clearly there are moral as well as financial questions that need to be answered.

“This impacted on innocent constituents and hopefully this will lead to justice.”

Savers are already braced to only be compensated for 5p for every £1 they saved. But there is still no time scale for any compensation to be awarded.

More than 18 months on, research shows that people are still caught in a spiral of debt after having to find additional money to buy presents and food for Christmas.