MPs urge Lloyds Bank to pay 'proper compensation' to firms affected by HBOS scam
A group of MPs has written to the bosses of Lloyds Bank demanding "proper compensation" for businesses defrauded in a scam involving a former manager at HBOS.
The All-Party Parliamentary Group on Fair Business Banking said that neither HBOS nor Lloyds, which took over the bank in 2009, had adequately investigated complaints from small business customers of Lynden Scourfield, who was jailed last week along with five others involved in the fraud.
The cross-party group's chairman, Scottish National Party MP George Kerevan, said that, 10 years after the first concerns were raised, some of those affected were still suffering financially.
Southwark Crown Court was told that Scourfield, who looked after corporate customers in HBOS's Reading branch until 2007, took bribes in the form of luxury holidays and sex parties in return for arranging loans which allowed corrupt financiers to profit from rip-off consultancy fees.
Judge Martin Beddoe said that some victims of the fraud were left "cheated, defeated and penniless".
In an open letter to Lloyds chief executive Antonio Horta Osorio and chairman Lord Blackwell on behalf of the APPG, Mr Kerevan said: "There are a large group of aggrieved business people who have lost their livelihoods, some their homes and, critically, have endured years of financial duress and personal stress.
"I understand fully that the individuals convicted were acting on their own and that the criminal activity took place under the previous HBOS ownership.
"However, detailed complaints and concerns regarding this criminal activity were raised with senior HBOS management at board level as early as 2007 and were repeated to senior Lloyds management after the takeover.
"In both instances, there was an internal failure to adequately investigate these complaints.
"Further, police investigations were delayed because both HBOS and subsequently Lloyds informed the authorities that it was the bank that was the wronged party - rather than the small business customers - but that the bank had no wish to pursue a prosecution.
"In this light, I write to ask for some assurance that the bank will review the circumstances surrounding its handling of the Reading fraud and publish the result.
"Second, that you can provide me with an assurance that there are protocols in place to ensure there is no repeat of this failure to act should a similar fraud take place.
"And third, that the victims of the fraud will receive proper compensation as some are still enduring hardship as a result."
Mr Kerevan told the Press Association: "Because of the way they were overcharged, a number of these businesses went bankrupt, so the question is not just about the money they lost initially, but also the consequential losses.
"Some of them have lost 10 years of their business lives.
"There has to be a generous response from the bank."