Lloyds Banking Group plc (LON:LLOY) has received further pressure from TV star Noel Edmonds over its proposed compensation scheme for victims of fraud at the lender’s HBOS Reading division.
Lawyers representing Edmonds called the scheme a “sham” in a letter to Professor Russel Griggs, who is reviewing the level of compensation claimants should receive.
Griggs was appointed by Lloyds in March as an independent reviewer to assess cases of people who were affected by the fraud.
Lloyds has set aside a £100mln pot in compensation payments for the 64 victims in the fraud in which former bankers of HBOS siphoned off money from struggling businesses to fund lavish holidays.
Edmonds, the former host of Deal of No Deal, is seeking £73mln in compensation over claims the fraud caused the demise of its Unique business empire and damaged his reputation.
Reviewer for HBOS fraud compensation under scrutiny...
Edmonds' lawyers, Keystone Law, claimed in its letter to Griggs that he lacked the financial expertise to ensure compensation payments were fair and Lloyds was interfering in the review.
“You are entirely dependent on what you are told by Lloyds in assessing the level of compensation that should be paid to fraud victims, and lack either expertise of your own or access to independent experts to assist you in your supervisory role in the review,” Jonathan Coad of Keystone Law said in letter seen by the Guardian.
“There appears to be no proper means of your making an independent assessment. It is difficult to see your role at present as much more than merely the applier of a rubber stamp on a pre-determined level of compensation which has been set by LBG (Lloyds Banking Group) itself. This renders the entire review scheme a mere sham which has been concocted primarily to preserve LBG’s profit margin and share price.”
Coad said many victims have not had the same financial backing as Edmonds to challenge Lloyds over the case.
Six people were jailed earlier this year over the case, which is estimated to have cost victims £245mln.
Edmonds said he was a client of former HBOS employee Mark Dobson who was sentenced to four-and-a-year years in prison.
Edmonds' lawyers call for independent expert on HBOS claims...
Coad called for an independent expert to be available to all claimants because a questionnaire provided to claimants by Lloyds to asses payout levels needed financial expertise.
“Conducting the review process without the input of a forensic accountant is akin to seeking to assess the extent of injuries of crash victims without the contribution of a doctor,” said Coad.
“I very much doubt if any but a tiny minority of them would be able to fund that advice themselves in the face of LBG’s refusal to do so. An independent forensic accountant (would) permit fraud victims and their professional advisers to judge whether the offer that LBG ultimately makes by way of compensation is fair and equitable.”
Lloyds has said it will make compensation payments to victims by the end of June. The scam took place between 2003 and 2007 before Lloyds rescued the bank in 2009 during the financial crisis.
Edmonds has enough litigation funding in place to take his case to court if the bank’s compensation scheme is not revised to make it reasonable for victims, Coad said.
The TV star has also criticised Lloyds for taking too long in making compensation payments.He made his claim on 21 April. Edmonds has requested a meeting with Lloyds chief executive Antonio Horta-Osorio.
Lloyds insists Griggs will handle compensation decisions independently...
A Lloyds spokesman said: “We have appointed Professor Russel Griggs as the independent reviewer in the HBOS Reading customer case review. Part of his role is to agree the individual case outcomes, and to ensure that these outcomes are fair. He will make his decisions independently.
“As part of the review we have asked customers to provide their own input and where we receive this input it will be considered by the independent reviewer. We have also said that we will pay customers for the necessary costs of participating in the review.”