 17th December 2018 Leading fraud QC demands Lloyds revisit “defective”, “unfair” and “partial” compensation scheme for HBOS Reading victims Calls for regulatory investigation into “lack of integrity” by senior Lloyds directors One of the UK’s leading legal experts in financial crime has called for Lloyds Banking Group (LBG) to “revisit the serious shortcomings” of the compensation scheme set up in April 2017 to provide to “provide fair, swift and appropriate compensation for the victims of the HBOS Reading fraud.” An in depth review by Jonathan Laidlaw QC, who has represented The Bank of England, the Football Association, Grenfell victims and directors of public companies facing Serious Fraud Office (SFO), Financial Conduct Authority (FCA) and US Department of Justice (DoJ) investigations, found that the review, led by LBG appointee Professor Griggs, is “procedurally defective and “unfair” and its methodology and guiding principles are “flawed and appear partial to LBG’s interests”. Mr Laidlaw QC also found that executive directors of LBG may have misled members of their own board, and their conduct “clearly discloses a lack of integrity required by those who are part of the [Senior Managers and Certification Regime] SCMCR”. This is the FCA’s regulatory regime that holds senior managers, including LBG chief executive Antonio Horta-Osorio, to account for the actions of the bank. These damning conclusions come in a 28-page advice published by SME Alliance, which supports business people in their disputes with banks, ahead of the parliamentary debate tomorrow on the Griggs process, called by Kevin Hollinrake MP, chair of the All-Party Parliamentary Group on Fair Business Banking. SME Alliance has also 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 his advice, Mr Laidlaw QC, reviewed LBG’s statements regarding the Project Lord Turnbull report written by senior LBG risk expert Sally Masterton. LBG initially denied that this was an official report, including in a letter sent in 2014 to the Crown Prosecution Service by its lawyers Herbert Smith Freehills, but last month admitted it was written following “a request from the Group”. Mr Laidlaw QC questioned how Ms Masterton and Professor Griggs, while having “on the face of it the same material” came to conclusions which are “inconsistent”. Noting that “there is no good reason to doubt [Ms Masterson’s] findings”, he raised questions about the completeness of the documentation provided by LBG to Professor Griggs and his advisors. In addition, LBG’s failure to inform victims of the conclusions of the Lord Turnbull report is “unexplained and highly unsatisfactory” and led to victims being “kept in the dark” so that they “made business and personal decisions on an uniformed basis”. 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 commissioning 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.” However, more than 20 months later, many still are fighting for fair payments. SME Alliance has found that: · Seriously ill HBOS Reading victims are being pressurised to settle by LBG and the Griggs team. One victim died of cancer while still in dispute with the bank; · Victims are being given 28 days to decide on offers without being given the information being used by the Griggs team to determine the level of payments; · Victims who have settled with LBG are being forced to sign onerous Non-Disclosure Agreements (NDAs) regarding the compensation process; · Many victims are being told that they are not eligible to enter the Griggs review, allowing LBG to put out misleading information about the level of settlements achieved; · Some victims are being forced to turn to other victims who have received settlements to support them through the onerous and extended process with LBG. The level of assistance is now running into seven figures. Mr Laidlaw QC found a number of serious deficiencies in the Griggs process. These included: · As LBG, which is in effect a party to the litigation, appointed Professor Griggs, it has a “very strong interest” in the outcome, so the review cannot be independent; · There is an issue to do with lack of disclosure of the “unnamed and unidentified accounting, insolvency and legal professionals” assisting the Griggs review; · The review was set up without reference to the views of HBOS Reading victims; · Failure to fund the cost of hiring experts to assist victims is “clearly unfair”; · The lack of an “identifiable procedure for appealing the decisions” made by Griggs was “both unusual and unfair”; · The Griggs process was “not compliant with various fair process principles” used by other similar tribunals. In conclusion Mr Laidlaw QC found that “the Griggs Review currently operating to redress the wrongs suffered by customers of [HBOS Reading] is procedurally defective” and that “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.” Nick Gould, chair of SME Alliance said: “Lloyds has failed to honour the promises of its CEO to deliver ‘fair, swift and appropriate’ redress for victims who have been suffering for more than a decade. The Griggs Review is a near perfect example of the bank being judge and jury of its own misdeeds. There is no transparency, no logical methodology and Lloyds’ executives appear to have misled victims, misled regulators and misled their own board causing untold additional pain and stress. It is time for Mr Horta-Osorio to stop the spin and put right the wrongs of this flawed process.” The Parliamentary Debate on the Griggs Review will take place on Tuesday 18 December from 4:30pm to 6:30pm. 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. About Jonathan Laidlaw QC Rated in the directories as a leader in the fields of crime, financial crime, health and safety, inquests and public inquiries and sport and previously awarded “Crime Silk of the Year”, Jonathan Laidlaw QC has consistently been ranked by Chambers as one of their star silks. He features in the Sunday Times/Debretts list of the 500 most influential people in Britain today. Jonathan Laidlaw QC’s practice is predominantly in business and financial crime, in defending directors and companies facing charges brought by the HSE and in professional, regulatory and disciplinary matters. Much of his work, both for individuals and companies here and abroad, is pre-charge and advisory in nature. Jonathan Laidlaw QC has also appeared in the Commercial Court, major inquests and sporting tribunals and is asked to produce reports in silk-led internal inquiries. He presently acts for the Bank of England, for a number of individuals who are the subject of SFO, FCA and DoJ investigations including Rolls Royce and ENRC; for PCP in the Barclays litigation; for The FA; for directors and companies facing gross negligence and corporate manslaughter charges; for a core participant in the Grenfell Tower Inquiry; and for Operation Kenova in Northern Ireland. Recent instructions include acting for Rebekah Brooks in the phone-hacking case; in the cricket match fixing case; for the Football Association in the Hillsborough Inquests; for Statoil in the In Amenas Inquests; for Fluor, Hugo Boss and Cape Industries, BAM, Ferrovian and Kerr in fatality cases; for Monovan Construction Ltd and JTF Wholesale in corporate manslaughter cases; for the trainer Jim Best in hearings before the British Horseracing Authority; for the IAAF in a CAS hearing in Lausanne; and for Allseas in their private prosecution. Dear all, As you may have read, it seems the Treasury and the Economic Secretary to the Treasury and City Minister, John Glen MP, have still not grasped how important it is for SMEs to have "Access to Justice". Many of us were shocked and disappointed by the Simon Walker Report which recommended an extended FOS as a way for SMEs to combat bank abuse. Aside from the fact many SME owners have little or no confidence in the FOS, this proposed extension with powers to award up to £350k, is of no relevance to the majority of SME’s involved with SME Alliance, whose losses far exceed this figure. It is truly disappointing that, having come so far in highlighting the plight of SMEs and having got the support of the APPG on Fair Business Banking, the TSC, the FCA, the DUP and so many MPs, the Chancellor and John Glen MP feel able to ignore the need for a Tribunal that would give SMEs access to justice. And the grounds that it would cost SMEs too much are spurious. At present and as we all know, the cost of trying to get justice ranges from tens of thousands of pounds to millions via the Civil Courts. We have been priced out of access to justice. Please see below various extracts from the press and Hansard where John Glen MP on the one hand recognises the appalling treatment some SMEs have experienced and on the other hand does not recognise the urgent need for a Tribunal. We cannot have got this close to getting justice for the whole thing to be just kicked into the long grass in such a cavalier manner. This is all down to politics now and I know Kevin Hollinrake MP is working very hard to try and reverse the Minister's decision. We need to help him by writing to the Minister and as many MPs as possible, so they can pass on our views to the Chancellor. The 5M plus SMEs in this Country who employ over 20M people, have not had access to justice for many years. And now we have the chance for progress via the Tribunal or even via the Tribunal and the extended FOS, the Chancellor and the Minister are happy to reply on what is at best an ill researched report and at worst a misrepresentation of key facts, to quietly sweep justice under the carpet. Post Brexit it will be even more important that the SME sector functions efficiently and is protected from unethical conduct. Please visit or write to your MPs - many of whom are already very supportive of the Tribunal. Best wishes Nikki  SME Alliance rejects disappointing and self-serving Walker report. SME Alliance, which supports business people in their disputes with banks, has rejected the main conclusions of the report by Simon Walker on behalf of the finance industry’s trade body into ways SMEs can challenge banks without going to court. Mr Walker’s conclusions – which include strengthening the role of the Financial Ombudsman Service (FOS) and a voluntary ombudsman service for larger businesses – fall well short of the demands by the SME Alliance, leading MPs and other interested parties for an independent tribunal to deal with disputes between businesses and their banks. Said Nikki Tuner, director of SME Alliance: “This report is off the mark and out of sync with what businesses want and need. Nothing short of a robust process will convince the millions of ordinary business people they are protected by the law. The SME sector has been ravaged by banks for years and neither the Financial Conduct Authority (or its predecessor body) nor the FOS have done much to stop this. The trust has gone, as has access to justice. A tribunal would re-establish this.” The report was commission by UK Finance, the representative body for the finance industry in the UK, including all the banks which may be in dispute with companies they have financed. SME Alliance also questions the voracity of the information referenced by Mr Walker and his team, in particular regarding how many victims of the HBOS Reading fraud were described as businesses that “were in trouble before they reached the bank.” It has been established, and accepted by Lloyds Banking Group which now owns HBOS, that the vast majority of the problems that harmed businesses were caused by HBOS and consultants working with it. Said Nikki Turner: “To make such a fundamental error brings into question the integrity and credibility of this review.” 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.  SME Alliance welcomes positive meeting with Barclays SME Alliance, which supports business people in their disputes with banks, has welcomed the positive approach shown by Barclays in the first of its meetings with high street banks. The Chairman and the CEO of SME Alliance met with Ian Rand, CEO of Business Banking Barclays, this week. The meeting was to not only open a channel of direct communication for legacy issues of SME Alliance members but also create a dialogue for future SME lending. Barclays was the first bank to accept the invitation from SME Alliance for quarterly meetings to discuss on going issues and better communication between banks and SMEs. Nikki Turner, speaking for SME Alliance said, “Both Nick Gould and I considered yesterday's meeting with Ian Rand and members of his team, to be extremely positive. This was an opportunity to break the ‘them and us’ silos that have existed for so long now between lenders and business clients. How can the SME sector ever regain any trust in the financial sector if we can't talk to decision makers, make our points and try to find consensually acceptable outcomes? And even where we are not in complete agreement - which, we don't pretend is likely - direct communication has to be a better option than costly litigation which many SME owners cannot afford and which only benefits the legal profession. A dialogue is now open between SME Alliance and Barclays and we are keen to progress this for our members both in terms of legacy issues and future funding." The next bank to meet SME Alliance is TSB, later this month. Further meetings are being organised with other high street banks. Nick Gould, Chairman of SME Alliance said, "We have always wanted to break down silos, we want to talk and we want to help open doors. After Brexit it will be extremely important that the SME sector can function to its maximum capacity. That won't happen if SMEs cannot trust banks - too many don't and with good reason. We are determined to help turn this situation around and we would like to thank Barclays for helping us to get off to a good start." 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. Dear Members,
As you may know our Chairman, Nick Gould, is involved with the APPG on Fair Business Banking's working group looking into Banking Contracts. Here is a message for our members.... “At a recent meeting of an APPG working group on banking docs I was asked to find examples in the docs people entered into with lending banks , of unfair or incomprehensible or unreasonable or unacceptable, clauses. I am sure you will have quillions of examples. If anyone is able to help and could send me some examples by 10th October I will pass them over. Thanks very much Nick “ Please send any examples to Office@smealliance.org  AGENDA FOR SME ALLIANCE MEETING 2.00PM – 5.00PM 18TH SEPTEMBER 2018 CHURCH HOUSE, DEAN’S YARD, WESTMINSTER SW1P 3NZ
Members, please note, as we only have the hall for 3 hours and we have a very full agenda, we won’t have time at this meeting for additional business or members updates. Please do feel free to bring documentation to distribute to members with any news / information or send it to office@smealliance.org so we can post it in the members area.
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