Lloyds fails to pay victims of fraud

Lloyds Banking Group is set to miss an end-June deadline for offering compensation to victims of one of Britain’s largest fraud cases.

Lloyds Banking Group is set to miss an end-June deadline for offering compensation to victims of one of Britain’s largest fraud cases, the latest delay in a decade-long struggle by business owners for redress.

Two former bankers at Lloyds’ HBOS Reading business were among those jailed in February for their involvement in the scam, which affected 64 people including Noel Edmonds, a TV presenter.

Lloyds set up a £100m compensation scheme in April and set the end-June deadline for payment to victims hit by the fraud, which involved siphoning off money from struggling businesses. According to one source with knowledge of the matter, less than a fifth of the 64 victims have received compensation offers and only one has reached a settlement with the bank.

Edmonds is seeking more than £70m in compensation for businesses he alleges were destroyed by the fraud. He has set up a website with an “honesty countdown” clock showing the time remaining for Lloyds to meet its self-imposed deadline.

Lloyds said on Tuesday it now planned to make compensation offers to some customers by the end of June. Others “might need more time to provide input into the review”.

A bank spokesman said: “Our focus is on swift, fair and appropriate compensation.”

HBOS, once Britain’s biggest mortgage lender under the Halifax and Bank of Scotland brands, had to be rescued in a state-engineered takeover in 2008 by rival Lloyds.

Lloyds subsequently needed a £20bn bail-out of its own after taking on HBOS.

“Lloyds clearly just want to grind down its fraud victims by a process of attrition, making the process of getting recompense as difficult and frustrating as possible to force them into accepting less than their entitlement,” Jonathan Coad, a lawyer for Edmonds said.

The jailed bankers pushed business owners to employ a costly turnaround consultancy as a condition for receiving loans and, in some cases, hand over ownership.