Lloyds has agreed to review its internal processes and submit evidence to a public inquiry, following criticism over its handling of the HBOS fraud case.
The bank has also hinted it may pay compensation to small business who were victims of the fraud, which took place at the HBOS Reading division between 2003 and 2007.
The fraud saw HBOS bankers enjoy sex parties and holidays around the globe while agreeing £245m in loans that could never be repaid for customers.
Lynden Scourfield, 54, forced struggling clients to use the services of his friend David Mills, 60, in return for romps with high-class hookers and lavish gifts.
Scourfield liked the escorts to dress in suspenders and kept a drawer full of viagra because he often could not manage to get an erection.
He pumped eye-watering sums of cash into the failing businesses as Mills and his associates charged exorbitant fees for “consultancy services” and ran the companies into the ground.
Although Lloyds did not acquire HBOS until 2008, MPs from the All-Party Parliamentary Group (APPG) on Fair Business Banking found that the criminal activities had been raised with senior Lloyds management after the takeover.
Lloyds chief executive Antonio Horta-Osorio stated yesterday (7 February) that the bank will work with the APPG to “to develop and test approaches in order to provide access to an impartial resolution” for small firms in dispute with Lloyds.
He added: “We are now able to take action to review the cases of all those who may have been affected and, where appropriate, to ensure they are fairly compensated”.
MP George Kerevan, chair of the APPG for Fair Business Banking, welcomed the news and urged Mr Horta-Osorio to follow through with his promise of compensation, work with the claimants to avoid costly court cases.
“It is my intention to press Lloyds to create a full, fair and adequate compensation scheme for those defrauded in the HBOS Reading affair, especially as I believe Lloyds itself was partly to blame for the long delay in bring this fraud to court,” he said.
“Lloyds cannot expect to be judge and jury in deciding the levels due to customers who have had to wait a whole decade for justice.”
Mr Kerevan added he intends to approach RBS and other banks to ask them to follow suit.
Last week, six bankers were convicted of a range of criminal activities including fraud, bribery and money laundering while working at HBOS’ Reading branch.
Lynden Scourfield, David Mills, Michael Bancroft and Mark Dobson gave fraudulent advice to small and medium sized clients, forcing them to pay for unnecessary bank services and then running up a list of phantom charges which drove the firms into insolvency.
Their assets were then transferred into a holding company, which was owned by Mills.
Scourfield was handed a jail sentence of 11 years and three months, while Mills was jailed for 15 years, Bancroft was jailed for 10 years and Dobson was sentenced to four and a half years.