Judge blasts HBOS for Farepak collapse

Mr Justice Peter Smith said that the bank could have saved Farepak, the collapse of which left more than 100,000 customers out of pocket and their Christmas celebrations ruined.

He made his views known a day after the collapse of a trial of former Farepak directors, who were exonerated from blame.

The judge said that “not only did the directors do nothing wrong, but they made strenuous efforts to save the group and the depositors”. The directors made at least15 attempts to save Farepak but met with a “flinty” response from HBOS.

Mr Justice Smith said a loan of £3m could have kept Farepak in business but the bank played “hardball”.

He said: “HBOS was not prepared to provide any positive assistance to solve the difficulties the group came into.

“It is striking that during the whole of the period it appears that further investment of £3m to £5m would have probably saved the group but HBOS was not prepared to make it.

“It is ironic that if the bank’s reputation for playing hardball had been repeated by the Government two years later, HBOS would not be here.”