Lloyds has told almost 200 former customers that it will forgive debts collectively worth tens of millions of pounds in recognition of mistakes it made over the scandal at its Reading branch that ruined or damaged small businesses.
The promise, communicated in letters sent this week, comes on top of a commitment last month to make £35,000 individual payments to 191 victims of the HBOS fraud as compensation for the stress and inconvenience created by Lloyds’s review. They may also receive payments for the original destruction of value to their businesses as a result of the fraud.
Lloyds has already written off some debts and is extending the amount after Sir Ross Cranston, 71, a retired High Court judge, concluded in a report last month that the bank’s redress scheme had “serious shortcomings”. Sir Ross found that Lloyds had blamed victims for the damage to their companies.
António Horta-Osório, 55, Lloyds chief executive, said at the time that it had been the bank’s “intention from the outset to deliver fair and reasonable compensation” but that Lloyds “got some things wrong”.
Lloyds has had to clean up the fraud at HBOS, which it took over in a rescue deal in 2008. A group of bankers and business consultants exploited reckless credit policies to steal from the bank, harming small and medium-sized businesses in the process. Six people were jailed in January 2017.
The initial compensation scheme set up in 2017 to repay victims was criticised as inadequate. It was overseen by Russel Griggs, a banking adviser, and has paid £80 million in compensation.
Sir Ross was appointed in May last year after criticism of the original scheme. The Financial Conduct Authority said Sir Ross “found serious flaws in important aspects of the approach taken by Lloyds”, including the way claims had been assessed. Lloyds needed to address the failures quickly, the FCA added. The regulator is still investigating several senior individuals from the bank.
Lloyds said yesterday: “The group is committed to ensuring Sir Ross Cranston’s recommendations are implemented and that customers affected by the HBOS Reading fraud are offered the option of an independent re-review of their cases, looking again at the assessment of any direct and consequential losses that flowed from the fraud.”