As Lloyds Banking Group explores how to compensate small business owners affected by banking and insurance company HBOS' bribery scandal, the U.K.-based firm has come under fire for alleged shortcomings.
News reports came Friday (July 21) that just five out of 67 small businesses have been compensated by Lloyds, despite the deadline for doing so — which was established by the bank itself — having passed nearly a month ago.
According to Lloyds, it has made offers to less than half of those 67 victims, many of which faced financial losses or a shutdown of business altogether as a result of the scam. Allegations of bribery and fraud hit HBOS — which was later acquired by Lloyds — with claims that consultants profited from small businesses' financial duress. Reports said Lloyds had denied allegations of prosecution until January, when six people were found guilty of bribery and fraud. Of the six former HBOS employees charged, five pleaded guilty.
Following the events, Lloyds began exploring how to compensate the small business owners affected by the scam. But reports last week said the bank is struggling to make headway, and now faces mounting criticism.
"Colleagues in both Houses of Parliament are very concerned, and are increasingly raising formal questions about how this matter is being conducted," said Lord Cromwell, chair of the parliamentary group on fair business banking. "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. Inevitably, this creates suspicion and we are hoping that Lloyds will now accept our repeated invitations to make the processes — including the nuts and bolts of valuing claims — far 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."
Lloyds had previously pledged to compensate victims with deals of $130 million or more by the end of June, reports said. But, as of July 21, reports noted, just five small businesses had accepted compensation offers, final offers had been made to an additional 16 companies and 14 more were in "the final stage of assessment."