BANFF and Buchan MP Eilidh Whiteford has commented on the news that customers and agents of Farepak, the Christmas savings firm, will ultimately receive half of the money they lost when the company collapsed – after liquidators BDO said that final payments will be made to those who lost out at the end of August.
Numerous savers and agents in Banff and Buchan were affected by the Farepak collapse, losing hundreds and even thousands of pounds in some cases.
Since the firm collapsed in October 2006 owing £37m to more than 119,000 savers (20,000 customers in Scotland) over 200 people have died before the lengthy liquidation process proceeded.
Dr Whiteford said last week it was ‘utterly shameful’ that savers are to recover just half of their money back while the final bill for the administrators and their legal advisers has already exceeded £8 million.
It is understood that the UK Government will also meet the legal costs of the company directors - costs estimated as much as £6million.
Commenting, Eilidh Whiteford said:
“After a six year wait it is utterly shameful that customers and agents will only receive half their money back while administrators pocket millions and taxpayers pick up the tab for the company directors’ legal costs.
“The impact on families in Banff and Buchan and elsewhere, who had put their Christmas savings in the trust of Farepak was devastating, causing real distress for people who could not have the family celebration they had planned.
“When you have worked hard and put money away for children’s presents and then to lose it all because of other’s failures was incredibly hard.
“Getting some of the money back is better than nothing but to only receive half and see much more going into the bank accounts of accountancy and legal firms is really galling.
“There is something seriously wrong when liquidations can take years to finalise and people are actually dying before the insolvency gravy train comes to a halt.
“My colleague Mike Weir MP, as the SNP’s Trade & Industry spokesperson has been leading calls for a major review of insolvency regulation, which has clearly failed in the case of Farepak and in many others that may not be so high profile.
“Self-regulation appears to be a major part of the problem. Insolvency work is handled by licensed practitioners, most of whom work for accountancy firms.
“The practitioners are in turn regulated by accountancy and law professional bodies, which have no independence from the firms they regulate.
“What’s more, there is no independent complaints investigation procedure or ombudsman to adjudicate on malpractices – and there are no questions over fees or delays.
“The sorry saga of Farepak has put this industry firmly in the spotlight and action needs to happen sooner rather than later,” she added.