The U.K. Financial Conduct Authority (FCA) is facing renewed criticism, this time over its handling of the program set up by Lloyds Bank to compensate small businesses impacted by fraud at its HBOS unit.
The BBC reported Monday (Dec. 17) that the SME Alliance, a small business advocacy group, is accusing Lloyds of preventing some SMB victims of the fraud from receiving compensation. The group is also calling out the FCA for allowing the establishment of what it describes as a “flawed” compensation program.
Specifically, reports noted, the SME Alliance is pointing to the review of Lloyds’ compensation scheme carried out by Professor Russel Griggs, hired by Lloyds as an independent party. But SME Alliance says the review is “procedurally defective.”
“The methodology and guiding principles are flawed and appear partial to the bank’s interest,” the SME Alliance said in a statement. “The scope of the review and Lloyds Banking Group’s selection of participants remains unclear, and there is no right of external appeal or oversight from the FCA.”
Lloyds previously said it has identified 71 small business victims of the HBOS fraud included in its review of who the bank will compensate.
Early last year, six former executives from the HBOS Reading branch were convicted of fraud, money laundering and corruption for their participation in the scandal, which targeted small business clients. While the fraud occurred before Lloyds’ acquisition of HBOS, Lloyds is now tasked with compensating those small businesses impacted by the scam.
Earlier this year, Reuters reports highlighted additional criticism against Lloyds and the FCA, with Kevin Hollinrake, MP, All Party Parliamentary Group on Fair Business Banking, pointing to the “unfairness” of the compensation program.
“We have no trust in such an opaque process,” Hollinrake said at the time. “The arrogance of this approach can no longer be countenanced.”
The FCA also faced criticism earlier this year during questioning from the Treasury Committee, which questioned the watchdog’s ability to handle serious complaints submitted by small business customers of big banks.
In May, SME Alliance Director Nikki Turner said the government should have “sack[ed] the FCA and start[ed] again” following the FCA’s investigation into another case of small business banking misconduct at the Royal Bank of Scotland.