To regain trust following an independent review that deemed its compensation plan to not be “fair and reasonable,” and which had to be redetermined, Lloyds Banking Group is to make a special £35,000 ($45,547.60 USD) payout to 191 fraud victims. Lloyds’ Managing Director Jo Harris told the HBOS Reading fraud victims in an email that it had pursued the measure to address concerns brought to Lloyds’ CEO António Horta-Osório over “the additional delay” from a new review, Financial Times reported.
Retired High Court Judge Ross Cranston called out the compensation plan for making too high a standard for customers who claimed direct financial loss because of the fraud, as well as for a shortage of transparency. Lloyds is reportedly working to “build bridges” with victims following the criticism, per FT.
“A re-review will take time, and this creates further delays and distress,” a Lloyds spokesperson said. “We have listened to these concerns, and are very sorry for this.”
An unnamed source said, per the report, that the decision of Cranston delivered a “shockwave” via the bank’s upper reaches, and has placed a burden on Horta-Osório to come up with a way to settle with the customers affected. The ex gratia payouts are said to cost the bank nearly £7 million, in addition to the £102 million it paid via the “flawed scheme” that reviewed 191 cases.
Lloyds — which acquired HBOS in 2008, and subsequently discovered fraudulent activity in the unit — paid out “generous” awards to impacted small businesses, Cranston previously said, but the process had “serious shortcomings.” He added that “the most serious shortcoming concerned the bank’s approach to assessing direct and consequential loss caused by the criminal misconduct.”
“Sir Ross has concluded that customers may not have received fair outcomes due to flaws in the review process,” Horta-Osório said at the time. “I am very sorry that this has happened.”