Savers who lost £37m when the Farepak Christmas club collapsed in 2006 could be compensated at a higher rate than previously expected according to the latest liquidators’ report. This follows a financial settlement with Farepak’s former directors.
The latest statement from liquidators BDO Hayward explains that legal action against the former directors of Farepak has been halted and £4m paid out as a result. This means that the 120,000 people who saved with the club may now receive 15p in the pound, rather than the earlier estimate of just 5p. For someone who had paid in £400, this means they could now receive £60. Although the announcement has been welcomed, it still leaves millions of pounds written off.
Warning for savers
The Farepak collapse was a sharp reminder of the dangers of unregulated saving. Banks, building societies and other deposit takers are normally regulated by the Financial Services Authority (FSA) and can be found on the FSA online register. If they fail, savers are protected by the (FSCS) to a limit of £50,000. By putting money into a regular savings account, you can build up a nest egg for Christmas and be sure your money is safe. With a top-rate account, you can also earn interest on your savings, although you need to check that there are no restrictions on withdrawals or plan well ahead.
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