Lloyds should not delay in compensating Farepak customers

http://www.guardian.co.uk/business/blog/2012/jun/21/lloyds-not-delay-compensation-farepak-customers

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It is embarrassing to say the least. A high court judge has said the actions of HBOS during the collapse of hamper company Farepak "might not be regarded in the public's eyes as acceptable".

Mr Justice Peter Smith also went as far to say HBOS should now contribute more than £2m to the distress fund set up after more than 116,000 Christmas savers lost out in 2006.

As a case to strike off the former directors of Farepak collapsed, the judge pinned much of the blame on the hard-nosed approach of HBOS bankers who could have saved the company with an extra £3m.

HBOS insists it acted properly at the time. Even so, the judge made a good point about the contribution to the distress fund which paid out just 15p in the £1 to the savers who lost out that Christmas. HBOS got back a couple of million of pounds from contractual entitlements while Farepak collapsed with £37m of losses.

Lloyds Banking Group, which now owns HBOS after the 2008 rescue bid, has already set aside £3.7bn to cover compensation and administration associated with payment protection insurance mis-selling. The judge conceded that the bank was not a "charity". But another couple of million to help the Farepak savers barely registers by comparison with the PPI scandal. To spare any further blushes, Lloyds should not spend a moment more "considering" the judge's comments about an extra contribution. It should pay up. And quickly.