LONDON, July 6 (Reuters) - Lloyds Banking Group said it would pay an extra 8 million pounds ($12.4 million) to former customers of Farepak following criticism by a high court judge of the role played by its HBOS unit in the collapse of the Christmas savings club.
Justice Peter Smith said last month that HBOS, which Lloyds had bought in 2009, took a “hardball approach” to Farepak’s demise six years ago and should seriously consider adding to the 2 million pounds it put into a distress fund for Farepak’s customers.
“We have looked carefully at the very specific circumstances surrounding the failure of Farepak and the economic and social impact resulting from it,” Lloyds said in a statement on Friday, adding that it was working to ensure the money goes directly to Farepak’s customers.
Farepak ceased trading in October 2006, owing 37 million pounds to its 120,000 customers, leaving many out of pocket and facing a bleak Christmas.
Business Secretary Vince Cable, who failed in an attempt to prosecute the Farepak directors last month, welcomed Lloyds’ decision.
“This increased compensation will go some way in helping those who were left considerably out of pocket by Farepak’s collapse. My department and Lloyds will work to make sure this money gets to the victims as soon as possible,” he said.
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