DEPARTMENT FOR
BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/092)
issued by The Government News Network on 12 May 2008
The Department for
Business and Enterprise has today announced that the official
investigation into Farepak by its Companies Investigations Branch
(CIB) has been completed.
CIB is now seeking independent legal advice on whether the
evidence contained in its report merits legal action.
Consumer Affairs Minister Gareth Thomas said:
"The collapse of Farepak was dreadful for the thousands of
people who lost money. The Government is working hard to prevent
other families suffering similar problems in the future.
"We initiated a comprehensive investigation to establish the
facts. We are now getting legal advice on whether there are
grounds for further action."
The investigation involved the analysis of thousands of documents
and numerous interviews with the directors and other interested
parties. Since the collapse of Farepak in October 2006 the
Government has also:
* Strongly supported the Farepak Response Fund appeal, which
raised £8million in total to help those affected.
* Worked with the remaining hamper companies to put in place
effective protection for customers' prepayments. They have
responded by putting in place independent trust accounts to
provide stronger protection for customers' money. These
arrangements are supervised by a new trade association (the
Christmas Prepayments Association).
* Given OFT an initial £1m for a new awareness campaign so that
consumers are better aware of their options for Christmas savings,
and committed a further £2m for 2008 -11.
* Taken advice from the OFT and FSA on the regulatory framework.
This will now be considered further by the Government in the light
of the results of the investigation, and taking account of the
views of the Treasury Select Committee.
Notes to editors
1. Gareth Thomas updated members of Parliament in a written
statement to the House of Commons today.
2. The Companies Investigations Branch (CIB) of the Department
for Business, Enterprise and Regulatory Reform started its
investigation into the collapse of Farepak in October 2006. The
investigation was carried out under Section 447 powers of the
Companies Act 1985.
3. CIB has the power to:
* Apply to the court to disqualify a director
* Refer evidence to other investigators or prosecutors (e.g. the
police or the Serious Fraud Office)
* Refer information to other regulators or bodies to consider
disciplinary or other action against their members (e.g. the
Institute of Chartered Accountants, or the Law Society)
* Apply to the Court to wind-up a company (not adopted in this
case as the companies were in administration and had creased trading).
4. CIB investigations of this type are confidential. It is
illegal to publish their results. If action does result from the
investigation it will not become public knowledge until court
proceedings begin. Not treating the results in confidence would
jeopardise any future action and would not be fair to the parties involved.
5. The Treasury Select Committee's Thirteenth Report, 2006/7
(on financial exclusion follow-up) reported on, among other
issues, Christmas savings clubs (paras 52-86). The report is
accessible at http://www.publications.parliament.uk/pa/cm200607/cmselect/cmtreasy/504/50402.htm
6. The Department for Business Enterprise and Regulatory Reform
helps UK business succeed in an increasingly competitive world. It
promotes business growth and a strong enterprise economy, leads
the better regulation agenda and champions free and fair markets.
It is the shareholder in a number of Government-owned assets and
it works to secure, clean and competitively priced energy supplies