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Another week, another crisis - or several - for Britain’s lenders.
The revelations about RBS’s computer problems, rate-rigging and interest rate swaps have almost overshadowed Farepak.
After a six-year investigation into the collapse of the firm, Lloyds Banking Group and its subsidiary Halifax Bank of Scotland have been exposed for preying on some of the most vulnerable in society.
The High Court was told how the poor, the elderly and those struggling to manage their finances had scraped together their savings, putting cash in a Christmas club each month.
Complaint: Farepak customers protest about their treatment in the scandal
They were told that putting their savings in Farepak would enable them to treat their families to the best festive celebrations their money could buy.
If they had put their cash in a bank and it had collapsed, the money would have been protected by the deposit guarantee scheme.
Not so with the savings plan operated by Farepak, and even today with similar schemes run by the Co-op and Morrisons supermarkets.
What happened to it, and them, back in 2006 is as gut-wrenching as it is heinous.
It was well documented that the business ran into financial trouble, but what we didn’t know is how the customers came to lose their cash.
At first it looked as though directors included Sir Clive Thompson, an ex-president of employers’ group the CBI, may have been at fault.
The Insolvency Service attempted to bring a case against him and the other directors.
HBOS, Farepak’s lender, did little to deflect that attention.
But the case was flawed and collapsed last week after a judge, Mr Justice Peter Smith, said there was no case to answer.
Instead, the evidence showed money-grabbing bankers at HBOS had feathered their own corporate nest, legally cheating the vulnerable out of their Christmas savings.
It emerged HBOS twice refused to protect £4m saved by customers to buy their Christmas hampers.
The judge said the bank had continued to accept deposits that it knew would be lost if the group went into insolvency and that these deposits ‘would only benefit HBOS and nobody else’.
This meant that when the firm collapsed into administration, the cash was used to repay the bank’s £31m loan rather than refunded to Farepak’s customers. It also emerged that bankers had referred to customers’ cash as ‘Doris money’, a derogatory term as offensive as cracking jokes about the disabled.
Last week the judge questioned the ethics of Lloyds’ directors, saying: ‘This is not a court of morality, but I would suggest that HBOS really ought to look at the collections that they took in September and October [2006] and seriously consider whether or not they ought to make a further substantial payment to the compensation fund.’
Having taken the £4m for itself, it sank £2m into the Farepak compensation scheme and is still in denial as to why some cannot see this as benevolence.
In fact, rather than show contrition it arrogantly defended its actions which include the comments about Doris money.
A spokesman said: ‘The bank and its employees acted entirely appropriately throughout.’
Pretty disgusting stuff â€" if I had drawn the short straw as mouthpiece for Lloyds last week, I would have mustered some backbone to use my influence to deliver a more appropriate message.
In years to come, bankers will take their place in the history books somewhere between Dick Turpin and Bernie Madoff. It has now been a week since the judge asked Lloyds to search its soul over what it did.
On Thursday, Business Secretary Vince Cable, heaped further pressure on Lloyds, led by Antonio Horta-Osorio and chaired by Sir Win Bischoff.
He has written to ask for the bank’s views on the critical comments from the judge and to clarify whether it will make a further contribution to the compensation fund.
But still nothing from Lloyds which is still ruminating over the judge’s comments.
The irony is that when it comes to vulnerability, Horta-Osorio is better placed than anyone to know the importance of being treated the right way.
He suffered personal issues at the end of last year but was supported by the bank and has made a swift recovery. The same could not be said for how Lloyds has treated the 100,000 Farepak savers. It continues to prolong their misery. Horta-Osorio now has the power to treat them the right way.
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