Farepak savings bosses may face prosecution

Farepak savings bosses may face prosecution

The government may take legal action against the directors and accountants behind Farepak, the Christmas savings club which collapsed leaving 150,000 people short of almost £40m in savings.

Gareth Thomas, the consumer minister, said in a statement to MPs that an investigation into the firm by the companies investigations branch of the Department for Business, Enterprise and Regulatory Reform (BERR) had been completed and its results passed to independent lawyers to see if prosecutions should follow.

Thousands of people, many of them on low incomes, lost savings when the Swindon-based firm went into administration in October 2006. The average loss was about £400 but some people lost more than £2,000.

Some 122,000 customers and agents have put in claims totalling about £38m, but have been warned to expect to recoup just 5p for every pound they are owed.

Thomas told MPs yesterday: "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.

"If proceedings are taken against any party involved, this will become public knowledge if or when the case reaches open court. We will do everything in our power to process this quickly."

The report runs.....continued below

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to 700 pages but will not be published as it is a criminal offence to disclose its findings in advance of any investigation.

Thomas also promised new regulations to prevent a similar collapse in future. He said: "We are doing all we can to prevent other families suffering similar problems in the future."

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