Lloyds to review compensation for HBOS fraud victims

7th Feb 2017 10:52

(ShareCast News) - Lloyds Banking Group has appointed consultants to assess whether the bank should pay out compensation to business customers affected by the fraud carried out by former executives of its HBOS arm.On Monday, MPs called for compensation to be paid to victims and for Lloyds to conduct a fresh review after last week two HBOS bankers and three 'consultants' were jailed for their role in defrauding many small business clients.After new evidence emerged during the trial, Lloyds said customer cases will be "considered afresh", specifying that it will only contact customers that were "potentially affected by the criminal activities".The all-party parliamentary group on fair business banking sent an open letter to the bank's chief executive, Antonio Horta-Osorio, and its chairman, Lord Blackwell, urging the bank to properly compensate victims.HBOS, which first received complaints about the fraud in 2007 and was acquired by Lloyds in 2008, has so far written off around £245m in loans that were not repaid.George Kerevan, chairman of the group, said: "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 small business customers, but that the bank had no wish to pursue a prosecution."The Times newspapers said there was extra pressure on Lloyds due to the emergence of a 2009 letter from a senior bank executive which appeared to mislead MPs and said the bank may need to agree to a compensation programme similar to Royal Bank of Scotland's scheme for victims of its global restructuring group.