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Farepak was a Christmas savings club operated by European Home Retail, which collapsed in December 2006 after adminstrators were called in when HBOS Plc decided not to extend the overdraft facility to European Home Retail [1]. By rejecting various options that may have enabled Farepak to continue trading, HBOS in effect caused more than 105,000 families, mainly on low incomes to lose on average £400 just weeks before Christmas, though some lost as much as £2000 [2].

The public response to the collapse and the reaction of the media and politicians was to place much of responsibility at HBOS's door . The public response would lead to highprofile and embarrassing protests outside the Banks newly re-opened head office building on the Mound in Edinburgh[3].

As a reaction to the increasing negative coverage of the Bank, and the threats some high-value bank account holders were making to move their accounts elsewhere [4], HBOS decided to make £2 million donation to the Family Fund, set up to help victims of the collapsed firm. [5] Though within the company it was felt that such a move was unneccessary [6] and after the donation was made, the company declared:

Our moral obligation, we believe, is to our customer, shareholders and, where appropraite, the wider community. We have more than discharged that obligation [7].

In a recent provocative move that has attracted more press attention, HBOS have announced their intention of moving into the Christmas savings business themselves, from May 2007. Savers will be able open new Christmas savings accounts for a minimum deposit of £5 and will be able to save between £5 and £100 per month[8]. A questionable business decision, coming less than a year after they contributed to the collapse of Farepak.


  1. ^ Guardian Unlimited (2006) Farepak Explained 08/11/06. Last accessed 15/04/07
  2. ^ BBC News (2006) The Farepak Collapse. Last accessed 10/04/07
  3. ^ Howarth, A. (2006) Straw says bank owes 'moral' debt to Farepak victims. In The Scotsman 12/11/06. Last accessed 20/04/07
  4. ^ Holyrood Magazine 29/11/06 Tarnished reputation for bank in Farepak scandal. Last accessed 20/04/07
  5. ^ Mesure, S. (2006) Farepak banker HBOS pays £2m into fund. In The Independent 09/11/06. Last accessed 20/04/07
  6. ^ Carrell, S. & Smithers, R. (2006) Bank faces boycott over role in Farepak collapse. In The Guardian 30/11/06
  7. ^ Womak, S. (2006) HBOS attacks Farepak savers. In Mail on Sunday 18/12/06. Last accessed 20/04/07
  8. ^ Treanor,J. (2007) HBOS Starts Christmas Savings Club. In The Guardian 28/03/07. Last accessed 20/04/07