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There was an urgent need to find a means by which some form of practical assistance could be delivered in time for Christmas. I discussed that with the British
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Retail Consortium, which agreed to attempt to put together a good-will gesture supported by donations from its member businesses. However, it subsequently came to the view that there were too many serious practical difficulties in the way of its organising a workable and timely form of assistance, so it asked me to think again.

Those difficulties were very real. The company had no record of its customers, only its agents. It had no information on what individual customers had ordered. There were no vouchers ready for distribution. The cessation of trading created a tangle of legal claims that had to be sorted out. The company had ordered only some of the food items needed to make up the hampers. There were also legal issues relating to the ownership of the agent list and the hampers. Despite those difficulties, the BRC still expressed a willingness to help, which set in train the decision to examine how we could get over those hurdles and find a way forward.

I was able to announce to Parliament on 7 November that my private office and I had held talks with the Family Fund, a registered charity with 30 years’ experience of helping disadvantaged families. From those discussions, a dedicated voucher fund, the Farepak Response Fund, was born. I am grateful for the assistance of the Charity Commission and Companies House for enabling all the legal paperwork needed to establish the charity to be completed in a matter of days, rather than weeks or months. The fund has since received donations amounting to more than £6.8 million. Some £340,000 came from individual donations, a substantial number of which were eligible for gift aid. The Family Fund, with the aid of Park Group, has now sent out those donations in the form of vouchers. Park Group itself donated more than £1 million to the fund, and, at its own expense and using its expertise, ensured that vouchers were printed and distributed to agents throughout the United Kingdom.

I noted what my hon. Friend said about the situation Swindon and I give her a commitment that I will check that as a matter of urgency. However, the first packets were sent out on 5 December and I understand that all the packages have now gone out for delivery, a week in advance of the target date of 18 December.

We have appointed the firm of accountants Grant Thornton. It has kindly agreed to audit the accounts for a nominal fee of only £1, which is purely for legal reasons. Once the audit is completed, in addition to the normal filing with the Charity Commission, I will place a copy of the accounts in the Library of the House for hon. Members’ consideration.

An even more complicated problem was what to do with the hampers. A solution was found only last week. Let me make it clear to the House that the hampers are not the wicker baskets that we perhaps imagine. Farepak customers could make a variety of choices about items for the table on Christmas day. In practice, the hampers came as boxed packages, not baskets, and a number of packages would make up the particular hamper that had been ordered. They held the sort of things that we would all usually have on our table on Christmas day and Boxing day. Some 8,000 agents had sent in orders. Farepak had ordered packages to be
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made up for some of the orders, but not all. It had expected to complete the orders closer to Christmas, but went insolvent first.

Some 19,000 packages had been made up and were deliverable, and they were held in a warehouse in Wakefield in west Yorkshire. In addition, there was a quantity of frozen food in another warehouse that is under different ownership. The Family Fund has not been able to find a practical way of delivering that frozen food, so the administrators are seeking to sell it off for the benefit of the creditors. As for the non-frozen packages, the fund has been offered free delivery by Home Delivery Network Ltd, which is one of the few companies with a distribution network spanning the country, and it can deliver directly to all agents in England, Scotland, Wales and Northern Ireland.

This is the busiest time of year for logistics companies—they are delivering a parcel every 17 seconds—so I am grateful that the company was able to offer its assistance. It is not only delivering the hampers, but sending a letter to every agent, explaining how the good-will gesture was distributed. As with Pawsons, a small family company that warehoused the hampers, Home Delivery Network Ltd provided all its labour and logistics free of charge. That service would otherwise have cost the companies concerned about £500,000—money that would have had to come from the fund. The lorries started rolling yesterday, and the first agents and customers got their hampers yesterday and today, ahead of schedule. Over the next few days, all 19,000 hampers will be distributed in England, Wales, Scotland and Northern Ireland.

I stress that it has not been possible to send to each agent exactly what was ordered, or even a proportion of what was ordered, as there are simply not enough packages, so the agents will simply select from what is available. The distribution of the packages will provide more value for the families than any available alternative would have done. I re-emphasise that the hampers are in addition to the vouchers already sent out. It is important to remember that the money used to purchase the hampers goes back into the administrators’ pot, and will be distributed back to the creditors—the Farepak families.

If we had not acted, the families would have been hit with a double whammy: they would not have received the goods for which they had paid, and the administrators would have gone on paying for storage—a cost that would have come out of the funds that are eventually to go to the families. The administrators might even have had to pay for the eventual disposal and destruction of the goods, and again, those costs would have come out of the money that is to go to the families.

The easy thing would have been to leave the hampers where they were; it was more difficult to find a way of making better use of them, but in taking that difficult decision, we did what was right for the families. I am pleased that we were able to find a way to take that action. There are many other channels through which direct and indirect assistance is reaching the families. The administrators have already refunded payments received after 13 October, and they are applying to the court for a ruling that all payments received between 11 October, when the company ceased trading, and 13 October, should be returned in full, too. That would
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enable the return of perhaps a further £500,000, directly to the Farepak agents. We must wait for the court’s decision on that.

As my hon. Friend the Member for South Swindon said, some agents have obtained credit card refunds under the terms of the Consumer Credit Act 1974, or debit card refunds under the terms of the issuing bank’s policy on charge-backs. I should mention that the banks think that not all agents who are in a position to seek a refund have done so. They tell me that although more than 24,000 payments were made using such cards, so far only 14,000 repayments have been requested, and those repayments total £2.5 million so far. I urge all agents who paid by credit card to contact their banks and seek a refund as soon as possible.

Some employers have aided affected employees, and are paying back employees’ losses in full. Donations from individuals will be eligible for gift aid, and that will add a further £50,000 or so to the fund. There are local initiatives in many parts of the country, and help in kind has been offered from many sources, particularly in providing logistical and distribution services. Without those services, we would not have been able to do what has been done, and we would have had to pay for similar services using the money collected for families. Uniquely, every pound donated to the fund will be delivered to the Farepak victims. Contrary to what some sceptics alleged four weeks ago, the fund has not paid out huge sums in administration and other costs.

Turning to the investigation, the first issue is to establish what happened. Given the extent of public concern, we decided that an investigation should begin straight away, and the companies investigation branch of my Department is investigating the circumstances surrounding Farepak’s collapse. Depending on the investigation’s findings, a report may be passed to appropriate regulators or prosecuting authorities.

Mr. Devine rose—

Mr. McCartney: My hon. Friend may have some important information, including a letter that he believes was distributed to agents and which could be vital to the investigation. I urge him to ensure that he passes it on to the companies investigation branch as a matter of urgency.

Mr. Devine: I will certainly do so. How far has the investigation progressed, and when will it be completed? Will it look at the role of HBOS, which appears to have acted as shadow director from February this year?

Mr. McCartney: I will write to my hon. Friend, and my reply will be consistent with the answers that I have given him in recent discussion in the House and with other written replies.

The administrators will report separately to the Secretary of State any findings of misconduct, and those findings will be considered alongside the report by the companies investigation branch. If he concludes that anyone is not a fit person to be a director, he may seek their disqualification for up to 15 years. Members
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should be aware that if a company is liquidated, and there is evidence of wrongful or fraudulent trading, the liquidator can ask the court to declare that those responsible should make a personal contribution towards the company’s assets. That is important, given what my hon. Friend the Member for Livingston (Mr. Devine) said about the letters that have been sent by solicitors. Hon. Members should not advise people who can little afford legal advice—in fact, they can access it only if it is free—to spend money on such advice until the administrator and the companies investigation branch have completed their inquiries.

As I have said before, I am not going to speculate on the reasons why Farepak failed, or on the culpability of its directors or any organisation associated with the collapse. If, as a result of the investigation, charges are brought, I would not want a clever lawyer to get someone off the hook because of any comments that I have made in the House or elsewhere. The Farepak victims deserve justice, and I would not want to be the person who denied them that. We will learn lessons from the collapse, and do what we can to ensure that something similar does not happen again. First, we will look at the regulatory framework. I have asked the Office of Fair Trading to work with the Financial Services Authority and my officials to look at the regulatory framework in which Farepak operated, and to consider options to address any issues that are raised. I expect to receive their preliminary views shortly.

Secondly, we will look at the wider implications of the Farepak collapse. I will work with my hon. Friend the Economic Secretary to the Treasury, who has asked Brian Pomeroy, chairman of the Financial Inclusion Taskforce, to look at why people were using Farepak and other savings clubs, and whether their savings needs might not be better met by mainstream financial products and, indeed, by the methods suggested by my hon. Friend the Member for North Swindon (Mr. Wills). I will contribute to the review, and the taskforce will report to my hon. Friend the Economic Secretary at about the time of the Budget. The investigators will produce a report on their inquiry. I can assure hon. Members that it will not take years, but it will take some time to ensure that there is a proper investigation, rather than a knee-jerk reaction.

Finally, I thank my hon. Friend the Member for South Swindon for thanking me. The people we should be thanking are not those whom I have mentioned but the agents, who lost everything. They were victims, as they lost their business, hampers and perhaps even the friendship of others. In the past five weeks, they have worked without any pay or hope of getting any money back to deliver vouchers and, now, hampers. They are the real Father Christmases, not me. I thank hon. Members for saying so, but it is a bit of an embarrassment. All that we have done is to try to help a little in very difficult circumstances, and I want to thank everybody who helped to make a contribution. We have moved from phase 1, which is to help people. The second phase is to investigate—

The motion having been made after Seven o'clock, and the debate having continued for half an hour, Madam Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eleven minutes to Eight o'clock.

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