Jim Armitage: Lloyds must clear up Reading compo or it’ll get worse

Lloyds tells Thursday’s Financial Times that all’s dandy with most customers who had their businesses destroyed by its crooked HBOS Reading branch.

These are the businessmen and women encouraged to take ruinously expensive “advice” by corrupt consultants who connived to push their firms into bankruptcy and asset strip them for themselves.

After the criminals were jailed last year, Lloyds hired an independent arbiter, Professor Russel Griggs, to assess victims’ compensation claims. It set aside £100 million for payments.

So far, more than 50 of the 72 victims have accepted Lloyds’ offers, the bank says. We’re all friends now.

That’s not quite the story you hear from the victims. While some are content with their settlements, many are not, claiming Griggs’ payments prioritise cases that threaten the biggest PR or litigation risk, rather than merit.

William Fox-Bregman, the lawyer for several, says there’s “no apparent logic” to how compensation is made. Victims may be accepting Lloyds’ offer, he says, but often only because they don’t have the stomach for a longer fight. Most have been battling the bank for well over a decade.

One complaint is that, when calculating compensation for distress and inconvenience, Griggs is not counting the years of anxiety since the fraudsters struck in the noughties.

Rather, he starts the stress clock at last January, when the fraudsters were convicted and jailed. The crimes, you see, occurred at HBOS prior to Lloyds buying it, and Lloyds says it was unaware of criminality until the court case.

If true, that approach could be at odds with email traffic in 2008 between Stewart Livingston, then HBOS chief corporate risk officer, and David Miller, then managing director of credit sanctioning. Discussing the cost of the Reading affair, Miller clearly refers to “rogue behaviour”. Both men went on to senior positions in Lloyds after the takeover. So how can Lloyds claim it was not aware what was going on and compensate accordingly?

The extent of Lloyds’ knowledge of the affair, and allegations of cover-up, is the subject of a review by Dame Linda Dobbs. She will not report until late next year.