Farepak Why All The Fuss?

Merlin the Magician

Merlin the Magician

At the Start
Joined
May 2, 2003
Messages
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Location
SOUTH WALES
I know its a huge fraud thats taken place but don't this apply to other companies who go under, and cant pay out individuals, why should this be a special case? or support any insurance policies that the individual has paid for up front**?

**I was with POWERHOUSE on a pre paid T-V insurance scheme cost me £300 cash my T-V breaks down I pay out £100 to have it repaired with 18 months still to go on my policy.
I wrote to the recievers /administratators of this company in liquidation and was told the return would be pennies, but no one came to my rescue with an offer of funding to pay my bill and the monies I have lost......

Can someone enlighten me or have I missed something, this is a genuine inquiry on my part or can you answer why all the fuss is being made?

We have a steel(ASW now changed hands to SELSA STEELS) company 1/2 mile from my house, who's workers(750) paid into a pension fund weekly out of their wages only to find that the company on going bust will NOT pay their pensions as they had spent all the money that was in the fund, these people have begged this government to help them but no one came foreward with donations to help these people out, so why should we people and the government be asked to donate to this FAREPAK fund????

Its a fraud that has taken place regardless as to how many people and the monies involved and companies involved.
 
The reason for the particular fuss as I understand it is this .

1 Farepak continued to take the money off the contributors even when in very serious difficulty - there appears to be a suggestion that they should have gone under earlier

2 Arguments about the attitude of the bankers - there is a suggestion they refused to allow contributions to be ringfenced - the bankers say there was nothing less to be ringfenced

3 The contributors tend to be from the poorer social groups in society with very little access to credit otherwise than from loansharks

4 The directors of the parent company are alleged to have paid themselves very fat bonuses not long before going under
 
When the gambling commission makes gambling debts payable by law what will happen is you'll see punters having their homes taken off them by bookmakers who've allowed them excessive credit. Meanwhile, bookmakers such as Luvbet, Burns etc. will just fall back on the same laws the Farepack scummos have and hang on to their homes, savings and what not.
 
This is from 'This Week':

More than 120,000 low-income families, who'd scrimped and saved to invest in the Christmas hamper savings club Farepak, now discover the company has gone bankrupt and around £40,000,000 of their money has vanished into thin air. Farepak, by its very nature, was a scheme for those surviving on a tight budget. Investors paid in small amounts each week into a club they trusted. The company repaid that trust by continuing to accept payments into a foundering business right up until the administration was called in.

It took cash from the poor all year round and banked it profitably, paying out no interest. In exchange it offered Woolies vouchers and a bog-standard Christmas hamper catalogue at inflated prices. All Farepak had to do for its £150 million a year was sit in Swindon and wait for the post - instead, between June and October, it used £40 million-worth of small savers' money to prop up its ailing parent company. This may be legal, but its managers should have had the decency to object to what was going on. And the Halifax Bank of Scotland (HBOS) which took £1m a week in overdraft payments from the company before finally pulling the plug, is also in moral deficit.

So the poor have had their Christmas ruined, said Polly Toynbee in The Guardian, while Farepak's fat cat bosses have made a fortune running it into the ground. Sir Clive Thompson, rightly dubbed a 'modern day Scrooge' by one angry MP, took £100,000 a year for his part-time job as chairman, while earning £894,000 at an investment company. A Farepak Relief Fund has been set up, said The Independent, to which MPs have donated (and a shame-faced HBOS has added £2m). But this is a token response. What's needed is regulation to protect all thos poor people who do the 'prudent' thing by joining savings clubs rather than get into expensive debt.

-------------------------

I'm sure Sir Clive will feel morally obliged to dig deep into his moth-nested pockets and drop a couple of fivers into the kitty. <_<
 
Originally posted by Merlin the Magician@Nov 18 2006, 12:19 PM
I know its a huge fraud thats taken place
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No it isn't. No crime has been committed and no money was stolen for personal gain. Unfortunately gross mismanagement and incompetence is not a crime. If the money paid in by Farepak members had been savings it would have been protected under FSA legislation. It was classified as deposits though, so there is no such protection.
 
Brian, would that also stand true (deposits vs savings) of other savings clubs? I was surprised that legislation wasn't already in place for this sort of thing, since they've been going for decades and surely Farepak isn't the very first one to go under? How can it have been called a savings club if, in fact, it wasn't?

I feel very, very sorry for all of the families who've been gypped by these turds. It'd be rather nice if the gaspingly rich in this country could help a bit - after all, it was for a family Christmas, and there's no way for them to recover in the time left. Perhaps that nice Mr Fayed could help out? :brows:
 
Although termed a "savings club" Farepak provided a pre-payment service - paying in advance for goods. As such it had none of the protection offered to those who pay into savings accounts. Legislation is now under consideration under which similar security of their funds will be given to the likes of Farepak members as to those who save in organisations who operate under the auspices of he FSA (Financial Services Authority).

The directors of European Home retail the parent company of Farepak, embarked on an ego tripping acquisition programme that included the purchase of booksales company DMG in 2000 for £35m. It used money from Farepak customers to buy DMG, then borrowed the same amount from the HBOS bank to replenish the Farepak account. DMG made disastrous losses and was later sold for just £5m. Last month HBOS called in the debt by seizing £36m of Farepak customers' money.
 
Did they offer any kind of interest on what peope "invested" or were they just a repository? If no interest was offered then people whould not be so stupid and hide the money under the bed or - god forbid - open a savings account.
 
Those sorts of savings clubs are relied on by poor people to enable them to budget . I don't think they deserve any criticism at all .
 
Yes, they are for people who are unlikely ever to have a bank account and the scheme opertaes through agents who are neighbours of the savers and who collect the weekly amounts by going from door to door.
 
Originally posted by BrianH@Nov 19 2006, 10:08 AM
Yes, they are for people who are unlikely ever to have a bank account and the scheme opertaes through agents who are neighbours of the savers and who collect the weekly amounts by going from door to door.
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Your bank accounts bit is wrong, many of these will have bank accounts but the temptation is there to take the money out and spend it on other things so therefore with an agent taking there money each week/month or whatever theres no getting the money back untill xmas, in a way its similar to what the milkman used to do when collecting each week for your xmas hampers.

Im with Adross on this, its unfortunate whats happened in this case but these sort of saving clubs should not be slated.
 
I've been with the Bank of Scotland since I got my first Uni grant.

I'm seriously tempted to close my account and take my overdraft elsewhere.
 
I don't know the details of the case but surely the bank charging interest on a loan/overdraft and then refusing to lend money to a flawed business is just standard practice - albeit a shame if the outcome ends up as it has done? I also cannot believe that it is in their interest to force the enterprise out of business with funds still owed?

HBOS also stuck a couple million into the recovery pool so I am struggling to portray them as the bad guys. Especially if the bonus payments to the Farepak execs turn out to be true.
 
Originally posted by betsmate@Nov 19 2006, 12:30 PM
Especially if the bonus payments to the Farepak execs turn out to be true.
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They are true all right - they're in the annual report and accounts. Chief executive of the parent company William Roilason was paid a £75,000 bonus in 2004 on top of his annual salary of £275,000.

The former managing director George Pollock and former financial director Chris Hulland who were responsible for the disastrous acquisition of DMG resigned as a consequence. They did not leave empty handed - Pollock pocketed a payoff of £680,000 while poor old Hulland had to make do with £250,000.
 
Regardless of the rights or wrongs of the Farepak directors (although they're clearly a load of chancers), I still don't understand why anyone, rich or poor, would join a "savings club" which pays no interest.

Why not just open an instant access building society account?
 
No disrespect intended, Ven, but maybe you haven't experienced poverty. People who struggle very hard to get by seldom see the need for a bank or building society. What little income they get is often divvied up upon receipt into envelopes, jars and vases to pay their electricity, gas, shopping, school meals, pocket money for kids, window cleaner, insurance man, milkman, etc. That's certainly the way it was in my younger days. Farepak would be just one more envelope in a shoebox in a cupboard for these people.

Also, take the example of those who put, say, £100 into Farepak. That's £2 a week. They're not going to go to the bank for that, especially when the bus fare would probably cost that and more, and the annual interest would be coppers. It's just not worth it for them.

I feel for these people and hope something can be done but I'd gladly hold the jackets if a few of them want to kick the sh*t out of the Farepak bosses.
 
I agree, Desert Orchid. Many of these people have no other way of saving for Christmas so it's much safer to have the money put away where they simply cannot reach it. Many probably wouldn't be worried about earning interest. I understand they get vouchers back not cash, as again the vouchers can only be spent in shops which is why these savings clubs are ideal for so many.

I am afraid the bosses of Farepak have prayed on some very vunerable people, many that cannot afford to lose £70 let alone £700 and I think the Director's have acted in an absolutely despicable manner. :blink:
 
The directors represent the callous side of capitalism and while there's no chance that they will be, they should be utterly ashamed of themselves. DO, I'll help you hold the jackets, and I'll bring the old cattle prod along, too... :D
 
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