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HBOS to give £2m to Farepak fund HBOS to give £2m to Farepak fund
(30 minutes later)
Banking group HBOS has said it will donate £2m to Farepak customers after the Christmas hamper and voucher firm collapsed last month. Banking group HBOS is to donate £2m to Farepak customers after the Christmas hamper and voucher firm collapsed.
Halifax, which formed HBOS when it merged with the Bank of Scotland, has been criticised for its role in the problems at Farepak. Halifax, which formed HBOS when it merged with the Bank of Scotland, has been criticised for its role as banker to Farepak's parent company.
Halifax was banker to the parent company of Farepak. Critics say Farepak was allowed to continue trading despite its problems.
The money will be given to the Family Fund, which has been asked to give donations to affected households. Swindon-based Farepak ran a savings scheme for about 150,000 people, but collapsed in October without offering its customers compensation.
Swindon-based Farepak ran a savings scheme for 150,000 people for vouchers and Christmas hampers, but collapsed in October without offering compensation. HBOS provided the overdraft facility to Farepak's owner, European Home Retail (EHR). It was an HBOS decision not to extend EHR's overdraft that eventually led to administrators being called in.
"As banker to EHR, the company which owned Farepak, HBOS at all times sought to help its customer through difficult financial circumstances," the banking group said.
"It is right that the group helps Farepak customers as well at this difficult time."
Financial difficulties
Suzy Hall, who has been leading a campaign for compensation, told the BBC that she was "absolutely disgusted" with the sum that HBOS had offered to pay.
"EHR announced financial difficulty in June. Why did they not pull the plug in June?" she asked.
"People who have saved hard for Christmas, have literally had Christmas 2006 ripped from under them," she said.
Farepak customers are estimated to have lost about £400 each on average, though some are thought to have lost closer to £2,000.
On Tuesday, Ian McCartney, the Minister for Consumer Affairs, described the situation as a "national emergency" and announced that the Farepak Response Fund was being established with help from York-based charity Family Fund.
Supermarket giant Tesco already has pledged £250,000 to the fund and called on other firms to help.
In another effort to help, High Street rival Sainsbury's has agreed that Farepak customers can get 25% of the value of their savings in Sainsbury's vouchers.