Farepak auditors Ernst and Young fined over collapse

Farepak had run a Christmas club and hamper business since 1968 before its collapse in 2006

The auditors of Christmas savings club Farepak, which collapsed seven years ago, have been ordered to pay more than £1m in fines and costs.

The company, which was based in Swindon, Wiltshire, went into administration in 2006 leaving 116,000 people with total losses of £37m.

The Financial Reporting Council (FRC) has fined Ernst and Young £750,000 and told them to pay costs of £425,000.

Auditor Alan Flitcroft, who worked for the accountants, was fined £50,000.

Ernst and Young and Mr Flitcroft, who were also formally reprimanded by the FRC, admitted their auditing fell below the expected standard.

Customers had invested money with the scheme as a way of saving for Christmas.

Paul George from the FRC said: "The FRC is pleased with the outcome of this case, which sends a strong clear reminder to all accountants and accountancy firms that they have a responsibility to carry out their professional work with due skill, care and diligence in the audit of subsidiary entities and obtain corroborative evidence to support management representations."