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Lloyds bank misses own deadline to pay compensation to victims of £1bn fraud

Ben Chapman
Friday 30 June 2017 13:52 BST
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The group said final offers have so far been made to just eight customers
The group said final offers have so far been made to just eight customers

Lloyds Banking Group has failed to meet its own deadline for paying compensation to the victims of a £1bn fraud.

The lender said it would make payouts from a £100m fund it set aside for customers of HBOS whose businesses were scammed, and in some cases destroyed, by two former bank employees.

Lloyds, which bought HBOS in 2009, said final offers had been made to just eight customers, leaving many more still waiting for redress.

The bank says 67 businesses in total were defrauded but victims’ groups estimate the number to be significantly higher.

In January, two former HBOS bank managers were convicted of fraud after they forced struggling clients to use the services of a so-called turnaround company, Quayside Corporate Services, led by David Mills.

Mr Mills’ company then squeezed the struggling companies for huge fees, causing many to go bust. Mr Mills bribed the bank managers with prostitutes, cash and lavish gifts.

Lloyds said in February that it would compensate those affected by the end of June, but to date only a small fraction of that money appears to have been paid out.

The bank said in a statement on Friday that it has made 13 interim payments totalling £485,000 to 13 customers. It did not specify how much it had paid out to the eight customers who have received final offers.

Adrian White, chief operating officer for commercial banking who is leading the review, said the delay was due to many customers asking for more time.

“We are disappointed that getting to offers is taking longer than we had hoped, but we are committed to doing everything we can to support those affected as we continue with the review,” he said.

Lloyds said every customer who had provided their input had been sent an offer of redress within four weeks.

The exact cost of the scam is not known. Jurors were told that £245m was extracted from firms but the total losses caused to customers and to the bank is reported to be as high as £1bn.

Anthony Stansfeld, police and crime commissioner of Thames Valley police, which led the prosecution said the £100m set aside by Lloyds was “nothing like” what would be required. Lloyds has also written off about £250m in loans linked to the scandal.

Noel Edmonds, who’s own business fell victim to the fraud, has attracted publicity for those affected by setting up an online countdown clock pressuring Lloyds to make the payouts by Friday’s deadline.

The TV star said he was pushed to the brink of suicide when his business collapsed ten years ago. “Until these criminals took me to the brink of emotional annihilation, I had always felt those who opt out by taking their own lives were selfish and cowardly,” he said.

“But having been cast into that bottomless dark space devoid of logic and reason, I have a much deeper understanding of life without hope.

“I seek no sympathy and feel no shame in admitting that on the evening of January 18th 2005 I attempted to end the overwhelming mental pain which had consumed my whole being.”

Mr Edmonds is seeking more than £50m compensation from the bank.

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