Farepak customer payout increased

Farepak customers will receive about 15p for every pound they lost in the collapse of the savings club in 2006
12 April 2012

Farepak customers are to receive an estimated 15p for every pound they lost in the collapse of the Christmas savings club in 2006, it has emerged.

The proposed payout comes after the company's former directors, who have not admitted liability, agreed to pay £4 million in compensation.

While the figure is a tenth of the £40 million lost by 120,000 former customers, the 15p in the pound is higher than previously forecast.

Farepak ran a savings scheme which helped people to spread the cost of Christmas spending across the year. Many of the people hurt by the collapse of Wiltshire-based Farepak were on low incomes or pensioners.

The victims lost an average of £400 each but were left with little hope of compensation after the company and its parent European Home Retail went into administration in October 2006.

It is not known which members of the Farepak board are contributing to the payout.

No date has been set for the payment to customers.

Administrators BDO told the Sunday Times: "The settlement will increase the estimated dividend payable to creditors.

"Based on current information, we estimate that the dividend will increase from about 5p in the pound to about 15p."

Some customers have already received money from Farepak's administrators after taking legal action.

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