Farepak compensation process problems

The government have recently been called on to intervene with the compensation process underway for those who suffered when the Christmas hamper company, Farepak, went out of business over five years ago. The request has come after it has emerged that over 200 customers of the company have died since it collapsed.

The Westminster spokesperson for the SNP is Mike Weir who has stated that the people who have died since the collapse never received any compensation for the Christmas hamper that they failed to receive. The liquidation firm responsible is BDO Stoy Hayward and a letter from the company stated, “We can confirm that those who have died since the company went into administration will have the money that they lost given to the next of kin or to their estate.”

When the company went into administration back in 2006 over 120,000 customers made claims against them for an average amount of around £400. Mr Weir stated that over 20,000 of the customers were left without their Christmas hamper from Scotland.

Many of the families who had ordered the Christmas hampers generally have a low income and had been paying a monthly sum in order to receive the Christmas hamper at the end of the year. Nearly 6000 customers in 2009 were given compensation. Many people had placed orders before a cut-off date set by the court and were unaffected by the ruling and are set to receive only around five pence for every pound spent on the Christmas hamper scheme.

Mr Weir continued, “It is a completely unacceptable that the company collapsed over five years ago and that many people have died without receiving any sort of compensation. There is something wrong with the system if liquidations can take this long to go through, it seems rather daft to me that people are actually dying before they receive compensation. Many people are still feeling the pain of that Christmas.

“These people put faith in this company and they used it as a way to save for a happy time of year. The fact that they are going to recover so little is just a continuation of the nightmare. Especially when you consider that the legal advisors dealing with the administration have already netted £8 million.

“Insolvency regulation in the UK has failed in this case and as with many other industries it seems that the problem is once again the issue of regulation. Regulation is organised by professional bodies but they have no independence from the very firms they are regulating. There is no ombudsmen or complaints investigation procedure and unacceptable delays and fees can simply not be questioned.

“Ministers in the UK need to change this procedure without any delay and bring the insolvency procedures of Farepak to a quick and decisive end to ensure that people receive a sensible amount of what they lost.”