Victims of one of Britain’s biggest banking frauds will each be offered £3m compensation packages, according to a source familiar with the proposed deal expected to be announced later this week.
Halifax Bank of Scotland (HBOS) – which is now part of Lloyds Banking Group – was involved in a major fraud at its Reading branch in the early 2000s.
A group of its bankers were found by a court to have ran an “utterly corrupt scheme” that left hundreds of small business owners “cheated, defeated and penniless”. Lynden Scourfield, a former senior HBOS manager, was sentenced to 11 years and three months in prison after the judge found he had “sold your soul, for sex, for luxury trips with and without your wife – for bling and for swag”.
Scourfield was described by a judge as an “utterly corrupt bank manager” who, driven by “rapacious greed”, had “got his tentacles into the businesses of ordinary and honest people and ripped them apart without a thought for those affected”. Scourfield and five of his partners were jailed in 2017 for a combined 47 years.
The extensive scheme drained the bank and small businesses of about £245m and left hundreds of people in severe financial difficulties.
About 200 people who ran companies hit by the fraud will be made the payment offer by a panel chaired by the former high court judge Sir David Foskett, if they are assessed to have made financial losses as a result of the fraud.
Eligible business owners will be given the option of accepting the packages instead of taking part in a re-review of their cases, which could extend the wait for compensation yet further.
If all the people were found to be eligible and the offers accepted it could lead to a compensation bill for Lloyds of almost £600m. Lloyds set aside £790m last year for costs relating to the HBOS Reading fraud.
A Lloyds spokesperson said: “We remain extremely sorry to all the customers who were impacted by the crimes committed at HBOS Reading and our intention has always been, and remains, to provide fair and generous compensation to those impacted by the fraud.
“We have been engaging with Sir David Foskett and his panel, along with other stakeholders, as the panel considers how best to speed up progress with assessing customer cases. We believe the panel’s changes to the process will achieve that aim. We are committed to continue cooperating fully with the panel as the re-review progresses.”
The TV and radio star Noel Edmonds was one of the highest-profile victims of the HBOS Reading scandal, having said that his firm, Unique Group, was pushed into failure by fraudsters at the branch.
He reached a settlement with Lloyds this summer, which is understood to have involved a multimillion-pound payment.
Read more:
Lloyds to offer victims of one of UK’s biggest banking frauds £3m compensation