Sunday, December 18, 2011
Farepak scandal highlights a system in need of reform
Like many other elected representatives, I have consituents who lost money as a result of the collapse of Christmas savings firm, Farepak five years ago. Attempts to salvage something from this mess and get compensation for the victims of this crash have now clearly run aground and in my view, Government intervention is the only alternative.
What irks more than anything is the way that the whole compensation process has become mired in professional fees, so much so that according to this article in the Wales on Sunday, the professional advisors stand to make more than the victims.
The paper says that accountants handling the winding up of Farepak have been paid £8m, but only raised £5.5m to return to victims. I find that quite extraordinary. The victims stand to get only 15p back for every pound they lost.
Farepak victims are owed around £38m. Maybe it is about time the Government intervened in the same way as they did for the victims of Equitable Life.
What irks more than anything is the way that the whole compensation process has become mired in professional fees, so much so that according to this article in the Wales on Sunday, the professional advisors stand to make more than the victims.
The paper says that accountants handling the winding up of Farepak have been paid £8m, but only raised £5.5m to return to victims. I find that quite extraordinary. The victims stand to get only 15p back for every pound they lost.
Farepak victims are owed around £38m. Maybe it is about time the Government intervened in the same way as they did for the victims of Equitable Life.
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"What irks more than anything is the way that the whole compensation process has become mired in professional fees..."
The solution is obvious: fixed fee quotes.
The rules should change to the extent that accountancy firms bid for such work by means of fixed-fee quotes.
There are law firms in the USA which work on this principle. Hourly billing (and fractions thereof) is 'so yesterday'. cw
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The solution is obvious: fixed fee quotes.
The rules should change to the extent that accountancy firms bid for such work by means of fixed-fee quotes.
There are law firms in the USA which work on this principle. Hourly billing (and fractions thereof) is 'so yesterday'. cw
# posted by 
: 1:26 PM
: 1:26 PM
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