Lloyds misses HBOS scam payment deadline
LLOYDS Banking Group will pay victims of the HBOS Reading fraud £35,000 each to cover their costs as they wait for compensation after the lender missed its own deadline for offering redress.
The bank has set aside £100m and had pledged to make compensation offers by the end of June to 67 small businesses, including the collapsed firm of celebrity Noel Edmonds. However, Lloyds said yesterday that so far just 15 of those firms had “received a compensation offer or are in final stages of assessment”, with one company accepting an offer.
The bank said it would make ex gratia payments of £35,000 “to all impacted individuals within the review, payable immediately, whilst they continue to provide their input to the review, to cover ongoing bills and expenses”. Because some firms have more than one director, more than 100 people are in line for interim payments.
The compensation programme has suffered delays because it is taking the bank longer than expected to gather information from people hit by the scam, a spokesman for the lender said. It is still trying to track down the directors of 12 firms.
The fraud took place between 2003 and 2007 and centred on the HBOS branch in Reading that handled small companies that had run into trouble.
In February, six people, including two former HBOS employees, were jailed for a combined 47 years and six months for the fraud, which involved business customers being referred to a consultancy firm and then asset-stripped.
Bribes including sex parties and luxury holidays were paid as part of the scam, which was investigated by Thames Valley Police.
Lloyds acquired HBOS in a rescue deal at the height of the financial crisis after the scam took place.
Last week, Anthony Stansfeld, the Thames Valley police commissioner, criticised Lloyds over its response to the scandal. He said the bank had for years refused to accept the scam had occurred even though there was “overwhelming evidence”. He likened the lender’s stance to a “cover up”.
Following the sentencings earlier this year, Lloyds announced it would undertake a compensation review led by Prof Russel Griggs.
However, the redress programme has come under fire from victims, including Mr Edmonds. The former DJ is seeking £70m from the lender, spurring speculation Lloyds has underestimated the amount it will have to pay. The Financial Conduct Authority is investigating what HBOS bosses knew about the fraud, while Lloyds is carrying out a probe into how it handled the scam after it bought the bank.