Farepak banker HBOS pays £2m into fund

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HBOS, the banker to the failed Christmas hamper company Farepak, has injected £2m into a Government-backed fund that was established to help families who have lost their festive savings.

The bank, which lent money to Farepak's parent company European Home Retail (EHR), will hope that the donation defuses some of the criticism of its role in the collapse. HBOS has came under fire for taking money from Farepak's estimated 150,000 customers while being aware of the financial crunch facing its parent company.

A spokesman for the bank said it was "only right to make a donation of that size given the difficulties people are experiencing". He added that HBOS had sought to support EHR through its financial difficulties, increasing what was already a "significant" overdraft.

Meanwhile, money continued to flood into the Farepak Response Fund from a variety of retailers and even Farepak's biggest rival, Park Group, which has donated £1m. The Christmas hamper supplier set up by the former Everton chairman Peter Johnson in 1967 dominates the hamper market. It tried to buy Farepak over the summer before the Swindon-based company went into administration but its offer was rebuffed.

Chris Houghton, Park Group's managing director, urged other retailers, businesses, celebrities and wealthy individuals to follow its lead. "Time is of the essence," he added.

The relief fund, which is being run by the Family Fund, a charity that assists families with disabled children, will turn the cash pledged into high street vouchers that it will distribute to Farepak agents by 18 December. Farepak's agents collected money from customers throughout the year, helping them to spread the cost of Christmas rather than run up huge debts. The money was turned into Christmas goods vouchers.

Yesterday Home Retail Group (HRG), which owns Argos and Homebase, joined the list of retailers that have pledged cash. HRG donated £150,000, which it described as a "sensible first step", and said it was "investigating other practical and robust ways in which we can provide further support to the 150,000 victims of the Farepak collapse".

The first MP also stepped forward to make a donation to the fund, responding to a challenge laid down by Ian McCartney, the trade minister who called on every MP to donate a day's salary. Peter Hain, the Northern Ireland and Welsh Secretary, said he was "pleased" to contribute a day's pay to the fund. Alasdair McDonnell, the nationalist SDLP deputy leader and South Belfast MP, followed suit.

The Consumer Council called on the Government to regulate the industry so that a similar disaster could be avoided.

Tesco, J Sainsbury, Wm Morrison and John Lewis have also pledged small contributions to the fund, as has Findel, a rival mail order company that acquired EHR's 40 per cent share of a joint venture it had with Findel called Home Farm Hampers.