08 November 2006

Grandstanding About Farepak

Ian McCartney is calling the collapse of Farepak a national emergency. In my book, an emergency is a new and pressing problem. Farepak’s listed parents’ shares were suspended in mid-August. That was the earthquake – this is the tsunami. Where were you in August, Mr McCartney? What have you done in the meantime?

Some commentators have pointed out Farepak’s latest reported profits of £1.2m suggesting that this, in itself, proves some sort of fraud. This is commercial illiteracy. Farepak was a subsidiary of European Homes Retail. Being a subsidiary means you do as your parent says and that includes sending the profits/cash upstairs. This would particularly be the case where the parent was in financial trouble. Farepak was a piggy bank.

Nevertheless, this is serious. Reports suggest between £27m and £40m (vague aren't they) of customers' money is tied up with Farepak. Suggests to me a strong case for the company to be regulated by the FSA - hello? McCartney has suggested MPs give up a day’s pay to help affected consumers. If I were an affected customer I might reply thanks for that drop in the ocean. Why not pay their balances in full? Also, didn't this happen under your watch, McCartney, not the opposition's? This is merely grandstanding. The blame game has started - the bank, the directors, retail bodies, trade associations, you, me, we're all to blame. How about the government?

Labour/Mc Cartney – get your own house in order first – Danny Dewsbury.


Jock Coats said...

Agree about the FSA. It seems to me that it's some kind of savings scheme. And indeed the whole idea startd as a sort of credit union type club way back when. It beggars belief that when you have to register the smallest credit union with the FSA, savings schemes of this sort of size and complexity would not be regulated by them.

If it isn't, the only thing I can think is that it is in fact some kind of deferred payment scheme. I'm told you put in your order in January and pay for it through the year but only receive it at the end of the year. But in that case it's like store credit, only backwards - like hire purchase. And all of those are regulated by the FSA I think.

By the way - if you mis-spell the name as I did on my blog, you'll get far more hits...:)

Praguetory said...

With that last comment, maybe I don't want people who can't spell the name to come here - on second thoughts who am I to be choosy - you're the only commenter today. What is and isn't regulated by the FSA is a very complicated beast. It is fair to say that if you have any significant amount of your money tied up somewhere, you'd be well advised for that institution to be FSA regulated. I find it hard to believe that no Christmas hamper will represent a personal tragedy for many, but then again it's not something I'd spend money on anyway.

Anonymous said...

I had a look at the Park Hampers site. Pay £1.11 for 45 weeks and get £50 of vouchers. So, that's £49.95 to get £50 of vouchers? Better off putting the money in the Post Office and take it out (including some interest) at the end of the year.

But no labour MP would suggest such a thing. Oh no. It's a "traditional means of saving". And that's typical Labour. Don't give any constructive advice to help poor people, something that might genuinely help them long term to have more fruitful independent lives. Just criticise industry like the BRC (who had nothing to do with this affair).