'Hardball' bank at fault over Farepak, says judge

 

News in pictures
World news in pictures
From the blogs

World Refugee Day: Thousands of displaced Syrians live on a knife edge

Standing by her makeshift tent in the unofficial camp of Baynjan , northern Iraq, Nasrin showed me t...

The day the police came for the man who now runs the Care Commission

David Prior's very personal reason for thinkg that investigators need appropriate expertise

Million pound investment to bring Liverpool homes back into use

Dozens of empty homes in two of Liverpool’s most deprived areas will be brought back into use thanks...

Dish of the Day: The Reluctant Vegetarian’s recipe for Triple the Greens Risotto

As a reluctant vegetarian (so reluctant that I'm not vegetarian at all) and a reluctant risotto eate...

       
Suggested Topics

Bankers at HBOS should be held at least partly to blame for the collapse of Farepak because of their "hardball approach" in refusing to extend its loans to the firm, according to a High Court Judge.

The Christmas voucher firm, which left 116,000 customers with losses totalling £37m when it failed in 2006, could have been saved by HBOS executives who instead opted to let it collapse by acting like "stookies" - Glaswegian slang for plaster casts – Mr Justice Peter Smith said yesterday.

Former investors in the company reacted with dismay when the Insolvency Service announced yesterday that it was suspending its attempt to punish Farepak's bosses by preventing them from acting as company directors in future.

But the judge said that in contrast to HBOS, Farepak's former bosses had done "everything possible" to rescue the firm, after legal action was halted one month into a trial in London.

The firm's demise was particularly controversial because many of those who lost out were low-paid or vulnerable individuals.

Mr Justice Smith said it was "striking" that "further investment from the bank of between £3m to £5m would have probably saved the Group, but the HBOS was not prepared to make it".

 

He added that the Bank was "perfectly entitled to do what it did", and HBOS said yesterday that its staff had acted "entirely appropriately".

 

However, the judge questioned the ethics rather than the legality of the banks actions and called on HBOS to offer customers up to £10m more to compensate their losses.

 

"This is not a court of morality but I would suggest that HBOS really ought to... seriously consider whether or not they ought to make a further substantial payment to the compensation fund," he said. "It seems to me that what happened there, whilst apparently legally acceptable, might not be regarded in the public's eyes as being acceptable."

Day In a Page

Babies behind bars: A Palestinian fertility doctor has become an unlikely hero by helping women conceive – even though their husbands are in jail

Babies behind bars

A Palestinian fertility doctor has become an unlikely hero by helping women conceive – even though their husbands are in jail
Sonic youth: The high-pitched sound alarm for under 25s

Sonic youth: The high-pitched sound alarm

Is Mosquito, the alarm only under-25s can hear, a blessing or a bane?
The art of living in small spaces: Architects are learning how to make less, more

The art of living in small spaces

Space in cities at a premium so architects are learning how to make less, more...
Special report: The story of Sir Mervyn King's reign at the Bank

The story of Sir Mervyn King's reign at the Bank

After four 'nice' years as Governor of Bank of England, things turned decisively nasty
Zombie nation: Our enduring fascination with a world full of death and destruction

Zombie nation: Our fascination with death and destruction

A new season of shows on Radio 4 is inspired by dark tales of future dystopias. Meanwhile, zombies are marauding in the multiplexes...
Martin Stephen: 'Ofsted says comprehensives are failing the most able but teaching bright children isn't rocket science'

'Teaching bright children isn't rocket science'

It doesn't take a selective system to nurture the best minds, says a former head of St Paul's boys' school.
The retail empires strike back: Can new technology lure us back to the high street?

Can technology lure us back to the high street?

The high street has been bruised and battered by online firms but in-store technology is helping to enliven the retail experience...
The 10 Best new smartphones

The 10 Best new smartphones

Photos, films, music, apps and browsing - the latest mobiles can do it all
Jenson Button: Downbeat driver cannot wait to put season behind him

Jenson Button: Downbeat driver cannot wait to put season behind him

McLaren man admits 'failed gamble' with car has left him pinning hopes on 2014 campaign
James Lawton: Firmer fist will be required to win Champions Trophy final battle with stouter foe

James Lawton

Firmer fist will be required to win Champions Trophy final battle with stouter foe
'To farm I have to rape the countryside. It’s got to be wrong': The true effect of the badger cull

The true effect of the badger cull

'To farm I have to rape the countryside. It’s got to be wrong'
Theatre review: Daniel Radcliffe gives an admirably honest performance in Michael Grandage's The Cripple of Inishmaan

First night: The Cripple of Inishmaan

Daniel Radcliffe gives an admirably honest performance in Michael Grandage's comedy
Girls Guides drop religious reference but pledge to self and the Queen

Guides drop religious reference but pledge to self and the Queen

After 103 years, organisation changes oath to welcome 'all girls, of all faiths, and none'
Steve Tongue: Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago

Steve Tongue

Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago
Chris Froome: Free from 'pain in neck' after Bradley Wiggins' exit

Chris Froome: Free from 'pain in neck' after Wiggins' exit

Sky's lead rider says he is in fantastic form for the Tour and happy pecking order debate is over