19 December 2018
Treasury and FCA have become Lloyds’ lapdog in response to Griggs compensation farce
Victims of the HBOS Reading scandal have reacted angrily to the announcement by City minister John Glenn MP that Lloyds Banking Group (LBG) will be allowed to conduct its own review into the flawed compensation scheme for HBOS Reading victims.
Speaking on behalf of the Government at the end of a Westminster Hall debate into the LBG’s compensation scheme for HBOS Reading victims, Mr Glenn said HM Treasury had agreed that the Financial Conduct Authority (FCA) and LBG would appoint an “independent reviewer” to assess LBG’s compensation scheme. This is despite the FCA agreeing to the original scheme and the appointment of a supposedly independent chair in Professor Russell Griggs, even though he had a prior business relationship with LBG.
The scheme was set up in April 2017 to provide, in the words of LBG chief executive Antonio Horta Osorio, “fair, swift and appropriate compensation for the victims of the HBOS Reading fraud.”
However, 20 months on, many victims are still awaiting fair compensation. An in-depth opinion from Jonathan Laidlaw QC, who has represented The Bank of England among others, found that the review is “procedurally defective and “unfair” and its methodology and guiding principles are “flawed and appear partial to LBG’s interests”. He concluded “to genuinely right the wrongs of the past, LBG should revisit the serious shortcomings of the Griggs Review and the FCA should commence its investigations and disciplinary process without further delay.”
SME Alliance, which is supporting many of the HBOS Reading victims, said that the reaction by HM Treasury, along with its recent support for a bank sponsored review system for SME complaints, showed that it is bending over backwards to placate untrustworthy bankers.
Said Nick Gould, chair of SME Alliance: “The Treasury and the FCA have become Lloyds’ lapdog. Allowing Lloyds to appoint its own ‘independent’ assessor once, could be dismissed as weird, but twice smacks of either arrogance or complicity. By commissioning a review of the Griggs process, the Treasury, FCA and Lloyds are accepting explicitly that Russell Griggs was not independent.
“The other key failing of this defective proposal is that it kicks a solution further down the road. and Many HBOS Reading victims have already been waiting more than a decade to get fair recompense for losing their livelihoods and more which has led to years of undue stress. It is extraordinary that Lloyds still seems to ignore the human aspects of this on-going nightmare.”
SME Alliance also supports the call made by Kevin Hollinrake MP, chair of the All-Party Parliamentary Group on Fair Business Banking, during the debate for Mr Horta Osorio to resign. It also thanked all the MPs who contributed to the debate, notably Ed Vaizey MP, who spoke at the first parliamentary debate into HBOS Reading 10 years ago.
SME Alliance has already filed a formal complaint to the FCA under the Senior Managers and Certification Regime about the conduct of executive directors at LBG, in which it alleges that “Antonio Horta-Osório has been aware of the evidence of serious criminal conduct originating at HBOS Reading at least since 19th April 2011.”
In February 2017 six people were jailed for a total of 47 years and nine months for a fraud both HBOS, and subsequently LBG insisted for many years, did not happen despite many internal reports into the fraud from 2007. In April 2017, LBG set up a process which Mr Horta-Osorio said would provide “provide fair, swift and appropriate compensation for the victims of the HBOS Reading fraud.”
About SME Alliance
SME Alliance was formed in September 2014 to support SMEs “battling against fraud, corruption and misconduct in the financial sector” and to lobby for the fair treatment of businesses by their banks and advisors.