Lloyds Banking Group plc (LON:LLOY) is yet to compensate most of the 67 victims of the HBOS Reading fraud nearly a month after its own deadline.
The lender, which owns HBOS, said today that just five of its customers had accepted its offers of compensation for the fraud that led to huge losses for small business owners.
Lloyds had pledged to agree compensation deals worth £100mln before the end of June.
The bank, which recently returned to private hands after the government sold the last of its stake, said in a statement today that it has made final offers to 16 victims with five of those accepting.
A further 14 cases are in the final stages of assessment by the lender and Professor Russel Griggs, who has been hired as an independent review for compensation claims.
“We are continuing to make progress in getting offers to victims of the HBOS Reading fraud,” said Adrian White, Lloyds’ chief operating officer for commercial banking.
“We have now either made offers or are in the detailed assessment stage for nearly half of the victims in the review. It is important we get the fullest possible information from victims to ensure we can factor in everything that could contribute to their compensation offer."
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Government 'very concerned' about process of compensating HBOS victims
Lord Cromwell, the chair of the all-party parliamentary group on fair business banking, accused Lloyds for a lack of transparency in its review of compensation claims.
“Colleagues in both Houses of Parliament are very concerned, and are increasingly raising formal questions, about how this matter is being conducted” he said.
“In particular there appears to be a lack of transparency, and therefore a lack of public confidence, in the processes set up unilaterally by Lloyds for assessment and settlement of claims."
Lloyds faces legal action
Lord Cromwell called Lloyds to accept "our repeated invitations" to make the process more open to assessment by victims and their advisers.
"Without that it is hard to see how this matter can end other than in bitterness and litigation.”
Six people were jailed for a combined 47 years and six months for the scam at the HBOS Reading branch between 2003 and 2007.
The fraud 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.