Lloyds Banking Group has paid compensation to only five of the 67 victims of the HBOS Reading fraud scandal almost a month after its own deadline for making redress offers for the “utterly corrupt scheme” that left small business owners “cheated, defeated and penniless”.
The bank, which was until recently part-owned by the government, said on Friday that just five of its customers had accepted its offers of compensation. It has failed to make any offer to more than half of the victims and the bank’s bosses confirmed that some of the customers were threatening to take the company to court rather than accept any deal.
Lloyds, which owns HBOS, had pledged to agree compensation deals worth £100m before the end of June. The bank said on Friday that it had made final offers to just 16 customers and only five of these had been accepted. It said a further 14 cases were in “the final stage of assessment” by the bank and Prof Russel Griggs, an independent reviewer.
Adrian White, Lloyds’ chief operating officer for commercial banking, said: “We are continuing to make progress in getting offers to victims of the HBOS Reading fraud. We have now either made offers or are in the detailed assessment stage for nearly half of the victims in the review. It is important we get the fullest possible information from victims to ensure we can factor in everything that could contribute to their compensation offer.”
Lord Cromwell, the chair of the all-party parliamentary group on fair business banking, said he was very concerned about the progress of the compensation scheme, which he described as a “running sore”.
“Colleagues in both Houses of Parliament are very concerned, and are increasingly raising formal questions, about how this matter is being conducted” he said. “In particular there appears to be a lack of transparency, and therefore a lack of public confidence, in the processes set up unilaterally by Lloyds for assessment and settlement of claims. Inevitably this creates suspicion and we are hoping that Lloyds will now accept our repeated invitations to make the processes – including the nuts and bolts of valuing claims – far more open to assessment by victims and their advisers. Without that it is hard to see how this matter can end other than in bitterness and litigation.”
Lloyds had denied that there was any wrongdoing at its Reading branch until two of its former employees were convicted of fraud in February. A group of six bankers dubbed “Britain’s Wolves of Wall Street” were jailed for combined 47 years and six months for a complex scam at HBOS’s Reading branch between 2003 and 2007.