(qlmbusinessnews.com via news.sky.com– Mon, 13th June 2022) London, Uk – –
The victims of one of Britain's most notorious banking frauds are to be offered £3m compensation packages in a bid to bring it to a swifter conclusion.
Sky News has learnt that talks between stakeholders in the HBOS Reading scandal have resulted in a proposal that will be put to customers – many of whom lost life-changing sums of money – this week.
The offer will be made by a panel chaired by Sir David Foskett, a retired High Court judge who was appointed in 2020 to recommend remedies to deficiencies in the original compensation scheme run by Lloyds Banking Group.
After more than a year since the re-review's launch, fewer than a dozen cases – out of about 200 – have been resolved.
City sources said that affected customers who had been classed again as victims of the fraud would now be offered £3m lump sums as compensation in exchange for settling their claims, rather than waiting for them to complete a formal review process.
If all the remaining cases are classified as victims chose to accept the lump-sum offer, it would cost Lloyds in the region of £600m, although the final figure will depend on both how many victims are deemed eligible for compensation, and the payouts they receive if they decide to pursue the full review process.
There was no suggestion on Monday that the lump-sum option would be of financial benefit to the UK's biggest high street bank versus the alternative of compensating victims after a full review of each case.
One insider said short-cutting the review and opting for the lump sum could be attractive to older victims or those in more immediate need of cash.
The HBOS Reading scandal has plagued Lloyds for a decade, casting a shadow over its reputation which has been deepened by the protracted failure to resolve it.
Six people were jailed for their role in the fraud, which predated Lloyds' rescue of HBOS during the 2008 banking crisis.
Lloyds itself had to be rescued with more than £20bn of public money, although taxpayers ultimately made a small profit on the holding when the final shares were sold several years ago.
Sources said the Financial Conduct Authority had been heavily involved in efforts to find a solution to the Reading compensation issue.
In an update published on the re-review's website in March, the panel said: “In recent weeks, we have held a series of meetings with the SME Alliance, the APPG on Fair Business Banking and Lloyds Banking Group (LBG) in an effort to identify and agree ways to speed up the re-review process.
“We recognise entirely that the re-review has progressed too slowly.
“We know this is a source of intense frustration for customers.
“It is a source of very considerable frustration for us too, particularly as we have already introduced measures we had hoped would move the re-review forward more speedily.
“We recognise the urgent need to readdress the problem.”
A spokesman for the panel said: “As customers will know, there have been extensive discussions over the last few months about speeding up the re-review process for the benefit of all those affected.
“The participants have been the panel, LBG, the APPG on Fair Business Banking and the SMEA Alliance.
“The discussions have been conducted on a confidential basis.
“The panel will issue its announcement to customers of the package of measures agreed in the next few days.”
Lloyds declined to comment.
By Mark Kleinman