U.K. policymakers are calling on top bank Lloyds to compensate SMEs that were scammed by HBOS in a scheme before Lloyds acquired the banking unit in 2009.
Reports Monday (Feb. 6) said MPs that are a part of the All-Party Parliamentary Group on Fair Business Banking have sent an open letter to Lloyds Chief Executive Antonio Horta-Osorio and Chairman Lord Blackwell urging them to compensate SMEs that fell victim to the fraud initiated by HBOS.
The fraud involved two employees of the banking unit, David Mills and Michael Bancroft, two friends of HBOS Manager Lynden Scourfield, who were enticed to create a turnaround consultancy, then imposed massive fees and debts on SMEs. Those small businesses were also stripped of assets, with many being driven to bankruptcy, reports said.
Scourfield was sentenced last week to 11 years and three months in jail, while Mills was sentenced to 15 years and Bancroft to 10 years. Other HBOS employees were sentenced to jailtime for their part in the scheme. The judge declared that the scam left many SMEs “cheated, defeated and penniless;” Scourfield reportedly rewarded Mills and Bancroft with bribes, including cash and prostitutes.
Now, MPs want Lloyds to pay for the wrongdoing.
“We are at a point where, once again, there are a large group of aggrieved business people who have lost their livelihoods,” said chair of the parliamentary group, George Kerevan MP, in the letter to Lloyds. “Critically, many have endured years of financial duress and personal stress.”
The MPs argue that Lloyds management was made aware of the issue as early as 2007, before the takeover of HBOS, with Kerevan arguing that “there was an internal failure to adequately investigate these complaints.”
Lloyds is reportedly planning to appoint a third-party consultancy firm to investigate the matter, as well as the businesses referred to QCS, the turnaround consultancy created by Scourfield. Reports said SMEs affected by the scam could see payouts later this year.