Lloyds Banking Group vows to review cases of customers caught up in HBOS fraud, after two ex-bankers jailed
Lloyds Banking Group today pledged to review the cases of customers who could have been caught up in a fraudulent scheme linked to two former HBOS employees.
Last week, two ex-HBOS bankers were among six people jailed for their roles in a ruse to drive small businesses into the ground for their own personal gain, running up losses of almost £250m for the now collapsed bank in the process.
Lloyds announced today that, with help from an independent third party, it would be reconsidering the cases in light of evidence unearthed during the trial. The lender said it would be contacting all customers it had identified as possibly being affected by the crimes and, where applicable, providing redress.
The bank added it "deeply regrets that the criminal actions have caused such distress for a number of HBOS business customers".
Lynden Scourfield, 54 and once head of the HBOS department responsible for businesses in financial difficulty, was sentenced to 11 years and three months at London's Southwark Crown Court last Thursday. Meanwhile, ex-HBOS employee Mark Dobson, 56, was sentenced to four-and-a-half years.
Scourfield was accused of accepting bribes, including cash, exotic holidays and sex workers, from turnaround consultant David Mills, 60. In return, Scourfield pressed troubled businesses to engage with Mills' firm should they wish to obtain further funding from HBOS.
Scourfield then advanced sums of money to these businesses so large they could never feasibly be repaid, allowing Mills, who was also jailed last week, and his associates to charge hefty fees for their consultancy services.
Many of the businesses caught up in the scheme eventually went into liquidation.
Just yesterday, the MPs in the All-Party Parliamentary Group on Fair Business Banking sent an open letter to Lloyds chief exec Antonio Horta-Osorio and chairman Lord Blackwell, calling on the bank's top dogs to compensate the fraud victims, to review its own handling of the scheme and to publish its findings. Horta-Osorio has now responded to this letter.
While welcoming the "prompt response", chair of the Parliamentary Group George Kerevan cautioned the lender it should design its compensation model with care.
"In order to rebuild confidence and to demonstrate true leadership and transparency, I would urge Lloyds to first sit down with the customers who were caught up in the HBOS Reading scam and involve them in designing the redress machinery," Kerevan said.
HBOS was taken over by what was then Lloyds TSB in January 2009, which was after the fraud had taken place.