The Government is putting more pressure on Lloyds Banking Group to repay Farepak customers who lost Christmas savings when it collapsed in 2006.
Business secretary Vince Cable has written to the bank following the ruling from a High Court judge who lambasted its subsidiary Halifax Bank of Scotland (HBOS) for the role it played in the collapse, the Daily Mail reported.
Cable urged Lloyds to “clarify what actions the bank intends to take as a result of the comments. This includes consideration of a further contribution by the bank to the Farepak compensation fund”.
The Insolvency Service ended a six-year investigation into Farepak’s directors last week after evidence showed HBOS twice refused to protect £4m of customers’ money by placing it into a trust.
That meant that when Farepak collapsed into administration in 2006, the money was not refunded to customers but was instead used to repay the bank’s £31m loan.
Cable said: “I want to stress the Government is considering the wider implictions of the judge’s statement and the way forward.”
He is to meet a representative group of Farepaks’s creditors to discuss the case.