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‘Flawed’ FCA compensation scheme for Lloyds customers criticised

Lloyds Banking GroupAn official complaint has been filed to the FCA over the compensation scheme it set up with Lloyds over past fraud.

The redress package is “defective” and the methodology “flawed, according to the SME Alliance.

The pressure group represents small businesses, scores of which were affected when they suffered fraud at the hands of a unit of HBOS, a subsidiary of Lloyds, charged with “turnaround” business.

In January 2017, convictions were upheld for fraud, corruption and money laundering of six people including two former HBOS bankers in a £245m scandal over how assets were stipped from small businesses.

The Times reports that it has seen legal advice prepared by Jonathan Laidlaw QC indicating that the scheme was “unlikely to provide just redress”, and “gives rise to a real sense of injustice” when the level of compensation is taken into account.

The FCA originally set up a review into the bank’s practices, and a spokesperson tells The Times that its enquiries into how Lloyd’s handled the issues centered in HBOS’ Reading branch was ongoing.

71 customers have so far been given offers of compensation, and 64 have accepted them, the paper reports.

Lloyds tells the paper that the review is the best way to deliver “fair and reasonable compensation for customers in a way which was quicker and less expensive than through a court process.”

“We believe this objective has been fulfilled”.

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