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Lawmakers call for probe of Lloyds and KPMG over HBOS Reading fraud

Published: 09:58 22 Jun 2018 BST

Lloyds
Lloyds says the FCA is investigating the allegations

Lloyds Banking Group PLC (LON:LLOY) faces further scrutiny over a fraud at its HBOS unit in Reading after a parliamentary group called for an investigation into the bank’s handling of the scandal.  

The All Party Parliamentary Group (APPG) on Fair Business Banking called for the probe after a confidential report by a former Lloyds manager into the fraud was leaked online on Tuesday.

READ: Lloyds’ confidential report into fraud at HBOS Reading unit leaked

The so-called Project Lord Turnbull Report, written in 2013 and provided to the Financial Conduct Authority a year later, alleges Lloyds mishandled its investigation and disclosure of the fraud following its takeover of HBOS in 2009

HBOS failed to disclose fraud, report claims

The report - published online by Scottish businessman Neil Mitchell, a frequent critic of Britain’s big banks - claims HBOS were aware of the fraud as early as 2004 and failed to properly disclose it.

AAPG said the allegations that HBOS had concealed the fraud should be subject to “full, forensic and expeditious investigations by regulators”.

The group has also asked for a fresh investigation into KPMG’s audit of HBOS in 2008, claiming it “gave the bank a clean bill of health only two months before it hit financial difficulty”.

FCA investigates report into HBOS fraud

A Lloyds spokesperson repeated a statement made on Tuesday that the Financial Conduct Authority is currently looking into the report’s claims.

Lawmakers had urged Lloyds to publish the Lord Turnbull report last week before Mitchell took matters into his own hands, saying it was his “gift to all victims of bank crimes and their families”.

Lloyds said the report was written by the former manager at her own initiative.

“As soon as it came to Lloyds’ knowledge, the then Head of Group Audit asked the employee to set out what she had found,” a spokesperson explained on Tuesday.

“It was then provided to the FCA and the police.”

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