Lloyds Banking Group plc (LON:LLOY) has missed its deadline for compensating victims of fraud at its HBOS Reading branch.
The bank set aside £100mln in April to deal with the claims and said it would make compensation offers to 67 small businesses by the end of June.
But today the bank said just seven offers have been made so far, with only one having accepted and received their payout. Lloyds said the final stages of making a further eight offers.
The lender is now offering all the victims £35,000 payments each to cover bills and expenses while the review continues.
The fraud, which took place between 2003 and 2007, involved small businesses customers, who were referred to David Mills and his consultancy firm Quayside Corporate before being asset-stripped.
HBOS bankers were paid bribes, including sex parties and luxury parties, to refer the struggling businesses. The victims suffered substantial financial losses after Quayside loaded big fees onto the businesses and sometimes took control of them.
Noel Edmonds lashes out at Lloyds over compensation scheme
Among the victims is TV star Noel Edmonds, who claims the bank has created a “sham” compensation process that has been taking too long. Edmonds is seeking £70mln from Lloyds and has set up a website criticising the bank over its handling of the issue.
Edmonds also believes Professor Russel Griggs, who was appointed to conduct a review the compensation offers, has not been acting independently.
Lloyds 'disappointed' at delays to compensation offers
Adrian White, chief operating officer of Lloyds’ commercial banking arm, said he was “disappointed” that the payout offers to victims had taken longer than anticipated.
“Since the end of the HBOS Reading fraud trial, we have been working hard to provide fair, swift and appropriate compensation,” he said.
“But as we have met and spoken with victims, many have asked us for more time. We are disappointed that getting to offers is taking longer than we had hoped, but we are committed to doing everything we can to support from affected as we continue with the review.”
Six people were jailed in January for their roles in the fraud, which took place before Lloyds rescued HBOS in 2008 during the financial crisis.
The Financial Conduct Authority is investigating what HBOS bosses knew about the fraud.
Shares in Lloyds fell 1.04% to 66.45p in afternoon trading.