Page last updated at 11:34 GMT, Monday, 12 May 2008 12:34 UK

Farepak 'legal action' possible

Farepak depot in Swindon
Thousands of people lost money as a result of the Farepak collapse

The government is seeking legal advice over whether it can take action against those behind collapsed Christmas hamper firm Farepak.

The Companies Investigations Branch (CIB) has completed its investigation into how thousands of people lost their savings when Farepak collapsed in 2006.

But the 700 page report will not be published ahead of any potential legal action, the government said.

Victims have been told to expect no more than 5p for every 1 saved.

Big losses

Farepak became a household name across the country when it collapsed, leaving the average customer - often from low-income families - some 400 out of pocket, with some losing more than 2,000.

As well as saving for Christmas food hampers, many people had paid for vouchers they had planned to cash in for presents at High Street shops.

Auditor figures showed that 122,000 customers and agents put in claims for about 38m, but they have been told to expect just 5% of what they are owed.

"The collapse of Farepak was dreadful for the thousands of people who lost money," said Consumer Affairs Minister Gareth Thomas.

"The government is working hard to prevent other families suffering similar problems in the future."

Legal action?

The CIB said it had completed its report into the collapse of Farepak for the Department for Business, Enterprise and Regulatory Reform (BERR).

"We initiated a comprehensive investigation to establish the facts," said Mr Thomas. "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," he added.

"We will do everything in our power to process this quickly."

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