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Lloyds apologises for 'unfair' fraud redress

Lloyds apologises for 'unfair' fraud redress

The chief executive of Lloyds Banking Group has apologised to victims of the HBoS Reading fraud scandal after an independent review found the bank did not fairly compensate them.

Lloyds boss António Horta-Osório said he was "very sorry" some customers may not have received fair redress as a result of flaws in the bank's compensation scheme.

Six people were convicted and sentenced to up to 12 years in prison for their part in the HBoS Reading fraud which saw £245m in loans approved that could never be repaid between 2002 and 2007.

The scandal crippled small businesses in financial distress and Lloyds has since paid more than £102m to victims.

But an independent review of the bank's compensation scheme, led by law professor Sir Ross Cranston and published today (December 10), has found its "methodology and process...did not achieve the purpose of delivering fair and reasonable offers of compensation".

In a statement today Lloyds said it "deeply regrets" customer concerns had not been "adequately addressed" and promised to implement Sir Ross' recommendation to offer all customers the option of a re-review of their cases. 

Mr Horta-Osório said: "Our intention... 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."

While Sir Ross found compensation for distress had been "generous" the bank's redress scheme had not fairly assessed losses incurred as a result of the fraud.

Mr Horta-Osório added: "I want to emphasise my personal commitment to ensuring that those customers affected by the actions of individuals who have since been jailed for their crimes will get their claims properly addressed in an open and transparent manner."

An additional independent review led by Dame Linda Dobbs is still ongoing into whether the issues relating to HBoS Reading were appropriately investigated and reported to authorities at the time by Lloyds, following its acquisition of HBoS in 2009.

Last year the Treasury select committee was told Dame Linda's report was unlikely to be finished until the second half of 2019. 

rachel.mortimer@ft.com 

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