Antonio Horta-Osorio, the boss of Lloyds Banking Group, has “tied the hands” of the author of an independent review of fraud in its HBOS division and is forcing victims to waive all legal claims against the bank before they can enter a new compensation review.
The new compensation scheme is being launched after an independent review by Sir Ross Cranston, a retired High Court judge, found in December that Lloyds’ original response to the £245m HBOS Reading scandal was “neither fair nor reasonable”.
Sir Ross has offered to consider concerns raised by victims who believe they will be put at a disadvantage by one of his recommendations but Lloyds has refused to allow this. The revelation threatens to undermine Lloyds’ fresh compensation scheme for victims of the scandal in which crooked bank officials destroyed businesses before the last financial crisis and spent their gains on holidays and prostitutes.
Mr Horta-Osório told shareholders last week he was “personally overseeing” the implementation of Sir Ross’ recommendations to ensure HBOS victims “can now be confident their claims have been properly addressed”.
But one victim of HBOS, which Lloyds subsequently bought, said he was being put in a worse position by the Cranston Review’s recommendations. Paul Pascoe, a former business partner of Noel Edmonds, the TV presenter who was a high profile victim of the HBOS scandal, said that Mr Horta-Osório had refused to fix the problem or to ask Sir Ross whether it was the result of an oversight in his review.
One of Sir Ross’ staff told Mr Pascoe in an email on March 23 that the former judge had raised the issue with Lloyds but that “his hands are tied on the matter”. He said: “Sir Ross has discussed this with the bank on several occasions, and offered to consider the questions you have raised. The bank has declined his offer to become involved.”
Former customers who accepted compensation under the original scheme – known as the Griggs review – agreed as part of their settlements to waive any legal claims against Lloyds.
The Cranston Review therefore recommended that victims who wanted their claims revisited as part of the new review should agree in advance to waive future legal claims.
However, this applies even to the four victims, including Mr Pascoe, who never previously waived their rights. It is understood that the affected claims could run to tens of millions of pounds.
A Lloyds spokesman said: “It is important that we are fair and consistent in the treatment of all customers, including those customers who did not agree a settlement with the bank. Sir Ross’s recommendations require that those customers accept that the [re-review] panel’s decision is binding on both them and the bank.”
Customers who do not wish to do so could use alternatives such as mediation or litigation, he said.
A Cranston Review spokesman said: “Sir Ross has encouraged Mr Pascoe to contact the re-review panel regarding the issue.”