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.
At the sentencing, Judge Beddoe said Lynden Scourfield, a former senior HBOS manager, had “sold your soul, for sex, for luxury trips with and without your wife – for bling and for swag”.
Scourfield had pleaded guilty to the extensive scheme, which drained the bank and small businesses of around £245m and left hundreds of people in severe financial difficulties.
The judge described Scourfield as an “utterly corrupt bank manager” who, driven by “rapacious greed”, had “got his tentacles into the businesses of ordinary and honest people and ripped them apart without a thought for those affected”.
The Thames Valley police commissioner, Anthony Stansfeld, has criticised Lloyds for failing to accept that the scam took place despite “overwhelming evidence”, which he said amounted to a cover-up.
Some of the victims lost their companies, livelihoods and even their homes as a result of the scam. Paul and Nikki Turner, from Cambridge, were ignored for years when they tried to report what was going on after their publishing company, Zenith, was run into the ground in the scam.
“They defrauded us, denied for 10 years that the fraud had happened, ignored the debt from the fraud and tried to evict us 22 times in order to cover up the fraud,” Nikki Turner has said.
The Turners have said they will not negotiate compensation with Lloyds and will take the company to court.
Lloyds has issued one-off payments of £35,000 each to victims to cover their costs as they wait for compensation. The bank said the total offers and payments to victims total £10m so far.
This article was written by Rupert Neate, for theguardian.com on Friday 21st July 2017 08.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010