By a Newsnet reporter
An MP who has campaigned on behalf of victims of the Farepak Christmas savings scandal has welcomed news that those who lost out when the firm folded are to receive half their money back.
However, MP Mike Weir has criticised the £millions that have been spent on administrator costs and the legal bills defending the company’s former directors.
The news of further compensation for agents and savers, confirmed by liquidators BDO, brings to an end a six year battle for compensation after the Swindon based firm collapsed in October 2006 owing £37m to more than 119,000 savers – 20,000 of them in Scotland.
The news comes after SNP Business and Enterprise spokesperson Mike Weir MP – who has campaigned on behalf of the victims of the collapse to secure compensation – received confirmation from the firms liquidators that each victim of the saving scheme would be entitled to a further 32p for every pound lost, to add to the 18p they have already been awarded.
While savers are to recover just half of their money back the final bill for the administrators and their legal advisers has already exceeded £8 million. It is understood that the UK Government will also meet the costs of the company directors who have been cleared – costs estimated as much as £6million.
Mr Weir said:
“After a six year wait it is shameful that customers and agents will only receive half their money back while administrators pocket millions and taxpayers pick up the tab for the company directors legal costs.
“There is something seriously wrong when liquidations can take years to finalise and people are actually dying before the insolvency gravy train comes to a halt.
“Just like the banks, current UK insolvency regulation has failed. Part of the problem seems to be that the industry is largely self-regulated. Insolvency work is handled by licensed practitioners, most of whom work for accountancy firms.
“The practitioners are in turn regulated by accountancy and law professional bodies, which have no independence from the firms they regulate. What’s more, there is no independent complaints investigation procedure or ombudsman to adjudicate on malpractices – there are no questions over fees or delays.
“We hear a lot of talk about moral capitalism by Coalition Ministers, but there is not much evidence of action when it comes to helping those who have been failed by the system.”
Suzy Hall, who co-ordinated the Unfairpak campaign, a group set up to support victims in the wake of the crisis, said she was delighted with the final figure, describing it as a “fantastic result”.
“Never in my wildest imagination did I think we would get back 50p in the pound. Unfairpak believe we have won.”
The news comes too late for 270 Farepak agents and customers who have died since losing their money six years ago.
However, in a letter Farepak’s liquidator (BDO LLP) confirmed: “To date, I have received notification of the death of 207 Farepak agents and customers. I can confirm that any dividends will be paid to the next of kin or, where applicable, the estate of the agent or customer.”
The scheme, which went bust in October 2006, saw people make regular payments to agents in order to spread the cost of Christmas food and presents.
The scheme mainly attracted people on low incomes, and a lot of pensioners. Almost 120,000 people lost almost £37m in total.
One former Farepak agent, Jean McLardy, from West Kilbride in Ayrshire, recalled the moment she learned of the collapse.
Speaking in 2011 she said: “I only found out about it because my sister phoned me,” she added: “It was in the Sunday paper. And having to tell everybody was awful.
“I lost half a stone in weight in three days. Unfortunately my mum has since died, and I don’t know whether I’ll get her money back or not.
“But my mum might not be the only one in that position. There could be lots.
“Three of (my savers) were pensioners.”