Lloyds Banking Group has appointed a Scottish businessman who is a veteran of reviews into the banking sector to lead its compensation programme for the HBOS bribery scandal.
Professor Russel Griggs will be the independent reviewer charged with handling customer cases as Lloyds examines whether any small businesses should receive payouts in the wake of the scam at HBOS’s Reading office where corrupt financiers agreed inappropriate loans and used the proceeds to fund luxury holidays and prostitutes.
The scandal, the latest controversy to rock the banking industry, resulted in six people, including two former HBOS employees, being jailed last month for a combined 47 years and six months.
Lloyds, which is led by chief executive Antonio Horta-Osorio, said that Professor Griggs will be tasked with setting out “the scope, methodology and individual case outcomes of the review in order to ensure fair outcomes”.
He has been “selected for his experience in overseeing high-profile reviews of a complex nature and for his clear understanding of small and medium enterprises (SME), as well as his track record in ensuring the principles of fairness are followed in a number of joint Government, banking and industry initiatives”, the bank said.
Professor Griggs, a former chairman of the CBI’s UK SME Council, led a review of branch closures for the British Bankers’ Association last year, assessed the Lending Code in 2015, and in 2011 was named the regulator of a scheme to review declined applications for credit made by SMEs.
At Lloyds he will be handling the fallout from a fraud that has already cost the bank £245m and which centred on HBOS’s Reading office between 2003 and 2007. Lloyds agreed to rescue HBOS the following year during the financial crisis.
The fraud involved bribery with sex parties, holidays, cash and expensive watches and saw HBOS clients referred to a consultancy called Quayside Corporate Services and then asset-stripped.
Following last month’s sentencing, Lloyds came under intense political pressure to compensate businesses that were victims of the scam. It said today that it “has written to the majority of customers identified as having been affected by the criminal acts perpetrated by the two former HBOS employees and Quayside Corporate Services”.
The bank also plans to hold “several informal meetings with customers, providing an opportunity to hear direct from them and to listen to their views on the planned review”.