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Lloyds ‘Seriously Disadvantaged’ Customers in HBOS Compensation

Lloyds ‘Seriously Disadvantaged’ Customers in HBOS Compensation

(Bloomberg) --

Lloyds Banking Group Plc said it would reconsider some claims for compensation from the long-running fraud scandal related to the Reading branch of its HBOS unit, after an independent review found its process for dealing with the problem had left some customers “seriously disadvantaged.”

On Tuesday, Lloyds published the findings of a second independent review into how it handled losses to the HBOS fraud, which found that the bank had refused to disclose relevant documentation to customers who had lost money in the scandal. The review, which was conducted by former High Court judge and London School of Economics Professor Ross Cranston, also said the lender didn’t fund their financial advice,.

“Sir Ross Cranston’s review has concluded that while distress and inconvenience compensation was ‘generous, and beyond what a customer could hope to have been awarded under that head of loss by a court,’ the review did not achieve its objective of giving all customers the confidence that they had received fair and reasonable outcomes in respect of the assessment of direct and consequential losses,” Lloyds said in a statement accompanying the report.

Cranston’s findings are the latest in one of the financial crisis’s most lurid sagas. In 2017, two men were sent to prison for selling their souls “for sex, luxurious trips, for bling,” as part of a scheme to gouge struggling small businesses with high consulting fees and load them with excessive debt. In June, the Financial Conduct Authority fined a Lloyds unit 46 million pounds ($60 million) for its failure to alert the regulator or police in the matter.

“We are disappointed that, after such a long period of time, the consequences of the HBOS Reading fraud for customers have not yet been properly remediated by LBG,” the FCA said in a statement. “While finding that some aspects of LBG’s approach were reasonable, Sir Ross has found serious flaws in important aspects of the approach taken by LBG, including failures to adequately assess claims for direct and consequential losses.”

To contact the reporter on this story: Franz Wild in London at fwild@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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