Regulator hits Ernst & Young over Farepak

The accounting regulator has filed a formal complaint against Big Four firm Ernst & Young over its auditing of the Christmas club and hamper group Farepak, which collapsed into administration in 2006.

More than 110,000 savers, the bulk of whom were low-income women, were left owed more than £37m, about £325 each, and only received cheques for less than half that amount in August. The Government's Insolvency Service took nine former directors to the High Court earlier this year, but had to admit that its case did not stand up to scrutiny. Instead, the lender HBOS, which is now part of Lloyds Banking Group, has been partially blamed for the collapse and made an ex-gratia £8m payment.