
HBOS facing inquiry into Farepak debacle
LOSSES & LAWSUITS
HBOS had granted an overdraft facility of £40 million for European Home Retail (EHR), the parent company of Farepak, but now stands accused of letting it operate even as it was staring into the abyss, and of trying to make a profit out of its demise.
Farepak was set up in 1969 to help families afford Christmas by setting aside money in a company savings account at any time of the year. Its collapse has left 150,000 people out of pocket, some customers losing up to £2,000 each.
While nothing has yet been proven against HBOS, the reputation of the bank is beginning to suffer. One Labour MP, Jim Devine, says he considered calling for a boycott of HBOS products and services in Scotland until the issue is resolved, but in the end decided to register his protest through other means.
Devine has accused HBOS of operating as the "21st century's unacceptable face of capitalism". The claims against the bank rest on the case set out to Parliament by Devine's fellow Labour MP Frank Field.
Field claims HBOS "allowed Farepak to continue trading while it clawed back something like £1 million a week of people's savings to offset the company's overdraft, gaining £30 million from the disposal of the firm's assets".
Some 90 backbench MPs have signed a Commons motion that urges HBOS to release the £30 million it recovered from the company.
HBOS has flatly denied the allegations and has contributed £2 million to a voluntary fund set up to help Farepak's customers. However, the 150,000 people affected are expected to get back only four pence for every pound they put in.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
How Finma milked Credit Suisse’s CoCos to close UBS deal
An unusual clause in Swiss AT1 bonds allowed them to be written off, but could others follow suit?
US banks race against time as Fed plays climate catch-up
Long-awaited US climate risk exercise puts tough pressure on banks’ data and models
EU banks need ‘billions’ in hedges to pass new NII test
Declines in net interest income can be hedged, but the markets may struggle to handle the demand
CFTC chair gloomy over crypto legislation prospects
FIA Boca 2023: Behnam also asks Congress to grant more powers to regulate third-party tech providers
Missing Basel metric could have revealed SVB risks
US regulators did not implement economic value of equity test that SVB failed badly in 2021
Strict term SOFR trading rules ‘permanent’ says Fed’s Bowman
Official says restrictions on use of term SOFR swaps “should not be expected to change”
Esma still wants more tools to tackle clearing crises
Even after Emir 3 draft, EU regulator would like more powers over both foreign and domestic CCPs
Club rules? How German retail trading venues shut out PTFs
Murky rule books prevent non-bank market-makers from competing for Europe’s growing online customer demand