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Thursday, 21 June 2012

Peter Cummings: The face of banking greed

The 150,000 savers in failed Christmas Club firm Farepak were left with nothing when HBOS chief Peter Cummings allegedly decided that their savings, a measly £4m that the bank termed 'Doris money' would be taken to offset Farepak's £31m debts, instead of being secured in a special Trust, as Farpak's directors pleaded with Cummings to do. British taxpayers eventually stumped up £37,000,000,000 to sort out Cummings' mess - an irony not lost on Farpak customers, who lost out twice to HBOS. 

Cummings has already been handed a warning notice and fine by the FSA for his conduct at HBOS.


stab11 said...

Can anyone explain why Farepak ended up with £31M in debts ? I mean surely the business is a simple one in that you gather the customers money and have it earning interest for 11 months. Then in December use it to buy cheaply in bulk while selling it to the customers at a mark up. Why the debt ?

Raedwald said...

Farepak was owned by EHR, European Home Retail, head of a group that included Kleeneze and a couple of internet retailers. Farepak 'loaned' EHR £33m, and when EHR couldn't repay it, Farepak went bankrupt. The basic business model was sound.

The question is why HBOS lent Farepak £31m to lend on to EHR ... knowing it wasn't for Farepak, but Farepak's business being 'sounder' than EHR's it was perhaps easier to contrive

And the answer to that is greed.

Sean said...

Prison cells are the only solutions.

Anonymous said...

'The gallows are the only solution.'

There, fixed it for you.