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Lloyds faces up to HBOS whistleblower case again

After allegedly silencing a whistleblower who wrote an internal report criticising Lloyds Banking Group’s handling of fraud, Lloyds Banking Group has agreed to reopen the case, The Financial Times reports.

Using her insight from working as an employee in the bank’s high-risk division, Sally Masterton claimed that some of HBOS’ executives from the Reading branch were concealing a fraud before Lloyds took over during the financial crisis in her 2013 report.

Last month, the report was controversially released by MP Kevin Hollinrake, because he believed that “the circumstances of Sally Masterton’s treatment must be aired openly and not buried in a bank vault under a mountain of shareholders’ cash”.

The main controversy lies within the report, which claimed that Lloyds had received, yet not acted upon, evidence of the fraud, being released at the time when Lloyds had refused to compensate victims of the fraud as they claimed that they were not provided with any evidence.

Titled “Project Lord Turnbull” (but with no relation to the former cabinet secretary Andrew Turnbull), the project was claimed to be the reason for Masterton’s leaving in unexplained circumstances in 2014.

This, alongside the report’s release last month, has resulted in increased pressure on Lloyds which has led the bank to entrust the task with Alan Dickinson, a former executive at RBS, the FT reports.

Dickinson will be reviewing the treatment of Masterton and coming to the conclusion of whether or not the bank should apologise.

A Lloyds spokesperson told the FT that the bank was in “private dialogue with the author of the Turnbull report who [they] believe has acted with the best of intentions”.

Lloyds had not before publicly commented on Masterton’s intentions; prior to this, the bank merely stated that the report was not commissioned by the bank and that its allegations were not supported by evidence.

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