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I understand that the administrator has a statutory duty to report to the Secretary of State for Trade and Industry, and if the administrator considers that the conduct of any director makes him unfit to be the director of a limited company, as the administrator can prevent him from being one. We are discussing very rich men. They are rich off the backs of the hard work of our constituents, who now have nothing at Christmas. That is not justice.

Ms Katy Clark (North Ayrshire and Arran) (Lab): Does my hon. Friend agree that once the matter has been fully investigated, either civil or criminal action should be taken, if possible, against the individuals responsible in the company, considering the level of suffering caused to so many people?

Anne Snelgrove: My hon. Friend is absolutely right; that should follow. The Secretary of State has announced that there will be an investigation into the company’s dealings.

Was it fraudulent, after Farepak announced in July that it was running out of money, for it to continue to take Christmas money from families until October? I hope that the Minister can tell us whether the Farepak directors will be investigated for fraud, as my hon. Friend the Member for Livingston (Mr. Devine) asked last week in business questions. The Government have the power to ask for any documents or records and recommend that legal action be taken if the company has been involved in wrongdoing. If the Minister ensures that the administrator has the funds necessary to carry out a full investigation, so that the case does not end up as just another insolvency statistic, that will be a Christmas gift that both the Farepak customers and the Farepak directors really deserve.

Dr. Brian Iddon (Bolton, South-East) (Lab): My hon. Friend will know that Findel plc is quoted as indicating that the rescue package would be £10 million. Is that not a sign of how much the directors have robbed from our constituents?

Anne Snelgrove: It is indeed, but we are talking about even larger sums of up to £45 million. The Minister should look again at who should be regulated. He might come to the conclusion that all companies such as Farepak where people pay up front should be regulated.

Chris Bryant (Rhondda) (Lab): My hon. Friend rightly attributes blame where it should be attributed, but does she understand that many of the 25,000 agents throughout the country feel personally guilty? Will she make it absolutely clear that neither she nor any other hon. Member in the Chamber feels that the agents are responsible? Indeed, they are probably the most responsible people in many of the poorest communities in the country.

Anne Snelgrove: They are indeed. The agents hold their communities together, and have a strong sense of financial probity and community spirit. Many of them are sitting in the Gallery watching the debate, so I thank my hon. Friend for raising that issue.

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Mary Creagh (Wakefield) (Lab): On Farepak’s business model, does my hon. Friend agree that companies that take money from the very poorest sections of our society without giving any interest or any products up front should be classed as offering a financial service? It is a case of taking from the very poorest and giving, as she said, to the very richest.

Anne Snelgrove: Absolutely—my hon. Friend is quite right.

There is also the issue of the bond. A lot of people wrote to me to say that the company had a bond, but it was laughable. It made customers feel protected, but it was for £100,000, which is peanuts as compared with £45 million. The Hamper Industry Trade Association Ltd called the bond

I hope that the Minister will say that, if a company advertises a bond, it should be sufficient to cover that company’s liabilities.

We are told that the Hamper Industry Trade Association Ltd urged Farepak in August to safeguard its savers’ money, but the firm said that protecting clients was not a legal requirement. I think that it should be and I hope that hon. Members in all parts of the Chamber think so, too.

Mr. Fraser Kemp (Houghton and Washington, East) (Lab): I thank my hon. Friend for giving way. It is essentially on a technicality that such companies are not covered by the Financial Services Authority—because such payments are regarded as a deposit on goods—even though everybody knows that they are financial services organisations. That is how many of the customers and the collectors viewed Farepak. Does my hon. Friend regard that as a loophole that needs to be closed?

Anne Snelgrove: That is indeed a loophole that needs to be closed. If the industry is unable to regulate itself—as it has shown itself to be unable—we should legislate in this place.

I have asked a lot of questions of the Minister, as will other hon. Members after me. We have been very demanding and asked for every avenue to be pursued. The Minister knows why—for my constituents, this is the nightmare before Christmas. The tabloids have compared the Farepak directors to the Grinches that stole Christmas. The Minister has done much good work on the issue so far. Independent parties, such as the website, have praised my right hon. Friend for his efforts. For every family whom he can help, he will be seen as the man who saved Christmas.

The Minister for Trade (Mr. Ian McCartney) rose—

Hon. Members: Hear, hear!

Anne Snelgrove: I am not looking forward to a Christmas eve when parents in Swindon are faced with explaining why Father Christmas cannot call this year. I hope that the Minister will do everything that he can to make sure that that never happens again. I realise that we have a long way to go on the issue. Will he tell the Chamber where he intends to start?

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Several hon. Members rose—

Miss Anne Begg (in the Chair): Order. I want the summing-up speeches to start at 10.30 am, because I know that the Minister has a great deal to say. That means a bit of discipline from hon. Members. Thirteen have indicated in advance that they want to speak, which means less than three minutes each. It would help if hon. Members kept to that, because many people have a lot to say.

9.54 am

Mr. Malcolm Moss (North-East Cambridgeshire) (Con): I congratulate the hon. Member for South Swindon (Anne Snelgrove) on securing the debate. It is an indication of the impact that the scandal has had on constituencies throughout the country, and hon. Members from all parties, that we have a record attendance for a Westminster Hall debate.

Various adjectives have been used to describe the situation, including scandalous, incredible, unjust and unfair. It is heartbreaking for those involved, as well as shocking, and probably immoral and illegal to boot. In the words of the hon. Lady, this is indeed the nightmare before Christmas. In my constituency, 19 individuals in one small town alone are affected, while one lady in another town has lost £15,000. As the hon. Lady said, that money has been hard saved by people who do not have alternative means of saving. They have chosen that vehicle because, once the money was there, they could not get their hands on it in times of hardship.

The agents have been mentioned. They are obviously furious, because there has been no communication whatever from the management of Farepak. The agents have been totally abandoned and are feeling incredibly guilty, as the hon. Member for Rhondda (Chris Bryant) said. That is something that we, as parliamentarians, need to address. The agents were taking their friends’ and neighbours’ savings in good faith. One of the key components of the system is that people hand their money over to someone whom they trust. That trust has been entirely undermined and it behoves us to try to do something to rectify that.

I am pleased that the Minister is going to solve the problem—if not today, then fairly soon. He has been described as the new Father Christmas and I cannot think of anyone else in whose hands I would better place such a vexatious problem. I shall obviously be interested to hear what he has to say, as there are questions that he needs to answer.

What can we do immediately for the people who are affected? Several constructive ideas have been proposed and I am sure that more will be forthcoming. We need to send out assurances from Parliament to show that the problem will never arise again. Changes in the law seem vital and overdue. As has been asked, how can we advise and help people to avoid falling into the hands of loan sharks? We need to communicate to people that there are alternatives that they should use, although that will perhaps not solve their immediate problems.

Another question that I hope the Minister will address is whether Halifax Bank of Scotland will be held accountable for its role in the disaster. The bank apparently allowed Farepak to continue trading to recoup its overdraft. Should not HBOS have declared
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Farepak to be in administration long before that finally came about? The Secretary of State has announced that officers from the company investigations branch have started an investigation under the Companies Act 1985. Will the investigation put the directors of Farepak and its parent company in the dock?

Michael Connarty (Linlithgow and East Falkirk) (Lab): Will the hon. Gentleman give way?

Mr. Moss: I shall not, as I have only a few minutes.

It is outrageous that peoples’ savings should be stolen in that way. I was delighted that the hon. Member for South Swindon named and shamed some of the individuals involved, but surely any investigation should not stop at Farepak alone. We should be going for the directors of associated and parent companies.

The Government should recognise that the group of consumers affected followed the Government’s agenda: they were saving. They were taking responsible action to save for their future and to avoid personal debt. There is therefore a case for the Government to do all that they can to make funds available to help such families—possibly not directly, but certainly by organising a response from the retail sector.

In the long term, we need new legislation. Adequate provisions should be made to protect consumers’ money prior to the delivery of the goods and services that they buy. That would ensure that consumer moneys paid to Christmas hamper companies are protected should those companies go into liquidation. I would have thought that the Financial Services Authority would be best placed to regulate such companies.

9.59 am

Mr. Andrew Smith (Oxford, East) (Lab): I congratulate my hon. Friend the Member for South Swindon (Anne Snelgrove) on her powerful speech and her advocacy on such an important cause. As has been said, the fact that so many right hon. and hon. Members are here—this is surely the best attended Westminster Hall debate—shows the extent and depth of concern, reflecting that of our constituents, that something must be done. As she said, it is particularly tragic that so many of those affected can least afford to lose that kind of money—least of all at this time of year.

Many of my constituents are affected, as are those of other hon. Members. A lot face the loss of hundreds of pounds. Our local paper, the Oxford Mail, reported the case of a mother of six and her daughter, a mother of one, who had paid in £900 and £450 respectively. It is not hard to imagine what a blow the collapse has been for their Christmas.

A local agent and near neighbour of mine, Debbie Simms, who first alerted me to the scale of loss locally, paid her final instalment of £1,600 into the bank on Friday 13 October, shortly before the administrators were called into Farepak at quarter-past 2 that very day. She and I have been considering whether there is any way of getting the money back from the bank concerned.

The questions to which we must get answers and on which my right hon. Friend the Minister must act, although I know that he is already doing so, fall under three key headings. First, how did the collapse happen
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and could it have been avoided? As my affected constituents have pointed out, there were signs that something was wrong when shares in the parent company, European Home Retail, were suspended in August. How was Farepak allowed to go on collecting money? How is it that, as The Sunday Telegraph reported, millions of pounds were regularly transferred between Farepak and EHR? How is it that Farepak’s bank, HBOS, continued to take in customers’ money to credit a company that it must have known was in serious difficulty?

The Department of Trade and Industry inquiry must get clear answers on such questions and on the responsibility of Farepak directors. It must also have lessons to learn in respect of my second key question: how can we better protect the hard-earned money of people who save up for Christmas in such a way? After all, as has been pointed out, Christmas hamper schemes such as this one are, to all intents and purposes, savings schemes. They should be regulated as savings schemes and brought within the supervision of the Financial Services Authority. There is a clear need for standards. There should be oversight of the adequacy of such schemes’ financial positions and protection against money being siphoned off to elsewhere within a group. Furthermore, a bond or insurance scheme that protects against financial insolvency should be set up. I hope that my right hon. Friend the Minister can provide positive assurances that action, with legislation when necessary, will be taken as a matter of urgency on all those points.

The third and most pressing question of all is about what can be done now to help those who have lost out. I commend the speed with which my right hon. Friend, as Minister with responsibility for consumer affairs, moved to try to get a goodwill contribution from the British Retail Consortium. It was a bitter disappointment when it decided that as an organisation it could not help. I had written to the chief executives of Tesco, Asda and Sainsbury’s, all of which serve my constituency, asking whether they could donate just some of their profits in that very worthwhile direction.

Mr. Jim McGovern (Dundee, West) (Lab): I am interested to hear about the various rescue packages—the Big Lottery Fund, Sainsbury’s and so on. As someone who is on the record as praising HBOS for its commitment to installing free-to-use ATMs throughout Scotland and the north of England—many Members have signed an early-day motion to that effect—I question its part in this whole sorry state of affairs. Does my right hon. Friend agree that instead of looking at rescue packages, we should be looking at the profits of HBOS and asking it to make good the losses suffered by our constituents?

Mr. Smith: I have been critical of the role of HBOS in this affair and we can all think of a worthy destination for some of its profits.

Like my hon. Friend the Member for South Swindon, I am pleased that Tesco has decided to make a significant contribution, and I welcome the announcement from Sainsbury’s as well. Let that be a clarion call to other retailers, and to the banks involved, to show some Christmas spirit.

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Will the Minister pursue the idea of the London stock exchange dedicating a traders’ day of contributions for Farepak victims? I welcome the response from credit unions, and my own, in Blackbird Leys, has said that it will look sympathetically at the idea of low-interest loans to help those affected. It is important that people do not get deep into debt to doorstep loan sharks to try to buy their children a good Christmas. On a last very important point, I ask that everything is done as quickly as possible to get to the bottom of how many in each area have lost out. I say that because locally a lot of people are interested in helping out. I had an inquiry from a local business organisation at the weekend, and there is enormous good will from the public and in the local media towards the Farepak victims.

If businesses and others are to make a commitment to helping, they quite reasonably want to know the scale of the commitment that they are taking on. We need to take urgent steps to work out how many are affected and to what extent. I have been on to the administrator about that, and I hope my right hon. Friend the Minister can say something about it.

The collapse is a terrible thing. We must send a message that we want the inquiry and the Government to get to the bottom of how it happened and how the families were defrauded. We want action to stop it happening again, and we want to make it as easy as possible for businesses, and the community as a whole, to rally round and help the families enjoy the Christmas for which they saved up.

10.5 am

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I join other hon. Members in congratulating the hon. Member for South Swindon (Anne Snelgrove) on securing this debate and on the enormous amount of campaigning work that she has done on the subject. Her opening remarks set a great example for the debate.

Like those of other MPs, my constituents have lost many thousands of pounds. By way of illustration, people in the two communities of Kingussie and Newtonmore, where the total population is a little under 3,000, have lost about £75,000. That illustrates how in many cases the scandal has hit the most close-knit communities hardest, and the people on the lowest incomes most of all. As one of my constituents put it to me:

That is the core of what we must discuss.

Mark Williams (Ceredigion) (LD): I endorse what my hon. Friend says, but does he agree that, particularly among our smaller rural communities, the guilt to which the hon. Member for Rhondda (Chris Bryant) alluded is very real? There is no reason for that guilt; it is the conduct of the company that needs to be held to account. Through no fault of their own, people are feeling very vulnerable in such communities.

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