Lloyds will reopen compensation claims for victims of the HBOS branch fraud in Reading, after an independent review found the original scheme was “neither fair nor reasonable.”
It marks an embarrassing U-turn for Lloyds, which closed its £100m-plus compensation scheme in the spring and has been trying to draw a line under one of Britain’s biggest banking scandals.
Sir Ross Cranston, a former high court judge who ran the independent inquiry, said the bank’s review of the fraud had “serious shortcomings”.
The most serious concerned the bank’s “approach to assessing direct and consequential loss caused by the criminal misconduct,” he said. “This part of the customer review, both in structure and in implementation, was neither fair nor reasonable.”
Six people, including two former HBOS employees, were jailed in 2017 over a £245m loan scam perpetrated from the Reading branch. They were found guilty of pushing business customers into distress or failure between 2003 and 2007 by referring clients to a turnaround consultancy and loading them with unmanageable debts and fees. The fraudsters spent the proceeds on sex workers, superyachts and luxury holidays.
Lloyds originally offered compensation to 71 business customers. It paid out more than £102m in compensation, with individuals offered packages ranging from less than £100,000 to more than £5m.
The Lloyds Banking Group chief executive, António Horta-Osório, said: “The group is committed to act on the recommendations made by Sir Ross, and will fully support giving customers the option of a voluntary re-review of direct and consequential losses.”
