Farepak investigation complete

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