Lloyds boss ‘sorry’ as review slams HBOS Reading compensation process

The boss of Lloyds Banking Group says he is “very sorry” after a review slammed the claims process for customers hit by the £1bn HBOS Reading branch fraud scandal.

There were “serious shortcomings” in the compensation scheme, according to the report by Sir Ross Cranston.

He was appointed by Lloyds to examine the issue amid pressure from regulators and politicians after victims complained of poor treatment following the conclusion of the bank’s redress process under Professor Russel Griggs in May.

The report will also likely raise pressure on the Financial Conduct Authority to examine how the banking sector handles compensation claims.

The law professor’s review said that while “generous” awards were paid by Lloyds for distress and inconvenience, “the methodology and process of the customer review did not achieve the purpose of delivering fair and reasonable offers of compensation”.

But he added: “It may be that for many customers, they have already been adequately compensated.

“Accordingly, it may be that the reassessment process does not result in a materially different outcome for many customers.”

The claims relate to losses, including entire businesses, suffered by customers following a £245m loans scam run by corrupt staff at an HBOS branch in Reading between 2003 and 2007.

Six people were later jailed over the fraud.

Lloyds, which assumed responsibility for HBOS when it bought the lender in 2008, responded to the report’s conclusions by offering an independent re-review to any customer affected.

Lloyds chief executive, Antonio Horta Osorio, said: “Our intention when we set up the Griggs Review was to deliver fair and reasonable outcomes for customers in a swift way that would be more generous than through the courts.

“Sir Ross has concluded that customers may not have received fair outcomes due to flaws in the review process.

“I am very sorry that this has happened.

“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.”

The bank said it had paid out more than £100m in compensation to date.

The TV star Noel Edmonds, who was personally critical of Mr Horta-Osorio’s handling of the scandal, was among claimants to settle his case for an undisclosed sum.

The Daily Mail reported he had accepted £5m amid allegations the fraudsters’ actions had wrecked his entertainment business and driven him to the brink of suicide.

Sky News was attempting to contact Mr Edmonds to see if he planned to seek a new appraisal of his own claim.

In 2017, he had been planning a legal claim for as much as £300m.

The SME Alliance lobby group described the report as “damning” and called on Lloyds “to immediately offer fair compensation for all HBOS Reading victims.”

(c) Sky News 2019: Lloyds boss ‘sorry’ as review slams HBOS Reading compensation process