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Last Updated: Sunday, 12 November 2006, 22:46 GMT
Farepak bosses may face MPs quiz
Catalogue detail from Farepak website
Farepak customers have been fighting to win compensation
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.

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.

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'

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

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.

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.

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.

"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.

"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."

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.

As a result, if such a company fails, it does not have to compensate its customers, he added.

Victims react angrily to doomed Farepak rescue plans

MP calls for bank event boycott
08 Nov 06 |  Tayside and Central
Farepak families fund is launched
07 Nov 06 |  Business
Hamper rescue plan is 'unlikely'
03 Nov 06 |  Wiltshire
Government to probe hamper firm
24 Oct 06 |  Business
Farepak agents speak of sadness
17 Oct 06 |  Business

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