Lloyds agrees to stump up £8m for Farepak distress fund
Saturday 07 July 2012
Lloyds bank has bowed to pressure from the judiciary and politicians and made an £8m payment to the distress fund set up after more than 116,000 Christmas savers lost their money when Farepak collapsed in 2006.
Mr Justice Peter Smith said at the failed trial of former Farepak directors last month that he felt Lloyds' action at the time of the collapse "might not be regarded in the public's eyes as acceptable". HBOS, which Lloyds took over, called in its loans causing the £37m failure of Farepak when the business could have been saved with a £3m injection, the judge said.
The Business Secretary Vince Cable wrote to Lloyds last week, asking it re-examine its role in the collapse. He welcomed Lloyds' move yesterday, saying the increased compensation would go some way to helping those who were left considerably out of pocket by the collapse. He is set to meet a group of Farepak creditors and MP next week to discuss the case.
A Lloyds spokesman said: "In light of recent comments from Mr Justice Smith on HBOS's involvement with Farepak, Lloyds Banking Group has decided to make an ex-gratia payment of £8m for Farepak's former customers. This donation is in addition to the £2m donated by HBOS when Farepak failed in 2006. We are now working to ensure that this money goes directly to those customers."
He added: "While HBOS acted legally in its dealing with the company, as the judge himself acknowledged, we are mindful that, in acquiring HBOS in 2009, the group took on not only its legal and financial obligations, but also wider responsibilities.
"We have a crucial role to play in supporting business and the communities in which we operate. We have looked carefully at the very specific circumstances surrounding the failure of Farepak and the economic and social impact resulting from it."
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