A former high court judge has been appointed by Lloyds to run an independent review of its compensation scheme for the victims of fraud that took place at an HBOS branch in Reading, amid some claims that the scheme unfairly treated the customers and worked in the own interests of the bank.
Last Friday, tT=he banking group announced that Sir Ross Cranston, currently a law professor at the London School of Economics, would be overseeing the review. It also vowed that it would act on any recommendations.
The announcement came as Lloyds confirmed that the closure of its £96 million compensation scheme, which was launched after the criminal trial of HBOS Reading bankers two years ago.
In 2017, six people, including two former employees of HBOS, were imprisoned over a £245 million loan scam that perpetrated from the Reading branch, in which small companies were pushed under or damaged between 2003 and 2007 by being referred to a turnaround consultancy and burdened with unmanageable fees and debts. The fraudsters reportedly spent the proceeds on superyachts, luxury holidays, and sex workers.
Lloyds acquired HBOS at the height of the financial crisis way back in 2008. It has been attempting to draw a line under the scandal ever since.
However, its efforts to compensate the victims – in a programme that is run by Prof Russel Griggs – have been criticised by the victims heavily, resulting in the appointment of Cranston. The all-party parliamentary group on fair business banking said that it had received several complaints from victims who went through the scheme. The complainants assert that Lloyds failed to offer fair compensation in light of the losses that they suffered.
Some also said that the bank refused to explain the methodology or basis for its decisions, without offering any opportunity for appeal. The only other option has been to pursue the bank through the courts, which is considered to be prohibitively expensive.