Lloyds to pay £100m fraud compensation

By Brian Milligan
Personal Finance reporter

image copyrightGetty Images
image captionAntónio Horta-Osório, the boss of Lloyds, has expressed his deep regret

LLoyds has announced that it is setting aside a further £100m, to compensate customers who lost money in a fraud scandal.

Six people, two of whom had worked for Halifax Bank of Scotland (HBOS) - owned by Lloyds - were jailed in February.

The court heard they stole hundreds of millions of pounds from small businesses who were their clients.

At the same time, the Financial Conduct Authority (FCA) announced that it is re-opening an enquiry into the fraud.

Lloyds has already set aside at least £250m to cover other costs arising from the case, which was centred on the HBOS office in Reading.

"As I have stated before, we would like to express our deep regret and apologies to any customers directly affected by the criminal behaviour of these individuals," said António Horta-Osório, the chief executive of Lloyds Banking Group.

"We are absolutely determined that victims of the crimes committed at HBOS Reading are fairly, swiftly and appropriately compensated. We take responsibility for putting right the wrongs that were committed at HBOS Reading at the time."

FCA investigation

Some of the small businesses that lost money from the fraud collapsed as a result.

The bank said it would provide such victims with immediate payments on a case-by-case basis. Those in financial difficulty will be helped with day-to-day living costs.

They will also be helped with legal fees, and have their existing debts written off.

image copyrightJoanne Dove
image captionVictim Joanne Dove says she will wait and see how much she is offered by Lloyds

Joanne Dove, who said the fraud had caused the collapse of her environmentally-friendly nappy business, said she welcomed the news that money was being set aside for compensation.

"But the proof of the pudding is in the eating," she told the BBC.

"I'll wait to see how much they're offering for an interim fee. The least they can do is cover legal costs."

Professor Russel Griggs has already been appointed to assess which customers will get compensation, and how much they will receive.

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In addition, Lloyds will appoint an independent lawyer to determine whether the bank investigated the crime properly at the time.

The FCA said it would resume an investigation into the fraud, which it suspended in 2013, pending an enquiry by Thames Valley Police.

It will examine who knew what within HBOS, and whether they told the regulator.

The resumption of the FCA investigation was welcomed by Andrew Tyrie, the chair of the Treasury Committee.

"The public deserves to know the full truth about this and other HBOS failures," he said. "That this is taking so long is regrettable, but understandable."

The crimes took place before Lloyds bailed out HBOS in October 2008.

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