What was Farepak?
Farepak ran a savings scheme (Christmas club) which allowed people to spread the cost of Christmas across the year. The business failed in 2006, with the average saver being left £400 out of pocket.
What has been announced?
Farepak’s liquidators today announced that Farepak savers woulfd receive a final payment of 32p for every £1 they had saved. This is in addition to the 17.5p per £1 given by the Farepak Response Fund charity, which the Government set up in 2006.
During a recent High Court hearing a judge claimed HBOS bank (now part of the Lloyds banking group) was partially to blame for the collapse of Farepak as a result of its dealings with the company. As a result the Lloyds Banking Group make a £8 payment to the Farepak fund.
When will payments be made
The payments will be distributed to those affected at the end of August.
Why you should never save with Christmas clubs?
Long term readers will be aware of my general loathing of Christmas clubs – but if you are not then read my post Money tip #3 – Don’t save with Christmas clubs. The main thing to note is, that despite a trade association being set up after the Farepak collapse, which required members to ringfence customer money, Christmas Clubs are not covered by the Financial Services Compensation Scheme. In addition, Christmas clubs do not make financial sense in any event.