Lloyds expects compensation for fraud victims to total £100m

Lloyds Banking Group expects compensation payouts for victims of fraud at the hands of former HBOS staff to total around £100 million.

The lender said that it will pay compensation for "economic losses, distress and inconvenience" as part of a package of measures to assist victims.

This includes providing interim payments on a case-by-case basis to help those in day-to-day financial difficulty as a result of the fraud, covering "reasonable" fees for professional advice to customers and writing off remaining business and personal debts owed to Lloyds and not pursuing repayment.

Last month Lloyds recruited Professor Russel Griggs to spearhead an investigation into whether it should compensate customers who became victims of fraud at the hands of former HBOS staff in Reading.

It comes after a group of corrupt financiers were jailed for carrying out a £245 million loans scam and squandering the profits on high-end prostitutes and luxury holidays.

The Financial Conduct Authority (FCA) is also resuming its investigation into the episode after it was placed on hold in 2013 at the request of Thames Valley Police.

The watchdog said: "The FCA's investigation is focusing on the extent and nature of the knowledge of these matters within HBOS and its communications with the Financial Services Authority after the initial discovery of the misconduct."

Lloyds said the £100 million provision will be included in its first quarter results later this month.

The lender added that it has already "suffered losses and/or provided for at least £250 million of credit losses" in relation to the affected cases at HBOS Reading in previous financial periods.

Lloyds also announced that it will appoint a senior independent lawyer to consider whether the issues relating to HBOS Reading were investigated and appropriately reported to authorities at the time, following its acquisition of HBOS.

Lloyds chief executive Antonio Horta-Osorio said: "As I have stated before, we would like to express our deep regret and apologies to any customers directly affected by the criminal behaviour of these individuals.

"We are absolutely determined that victims of the crimes committed at HBOS Reading are fairly, swiftly and appropriately compensated.

"We take responsibility for putting right the wrongs that were committed at HBOS Reading at the time. That is why today we are providing an additional package of measures to ensure that customers have all the help they need as we resolve their cases as quickly as possible."

The fraud trial resulted in a number of convictions earlier this year.

Consultant David Mills, 60, bribed Lynden Scourfield, 54, who looked after corporate customers at HBOS's Reading branch until 2007.

Southwark Crown Court was told that Scourfield took bribes in the form of luxury holidays and sex parties in return for arranging loans which allowed corrupt financiers to profit from rip-off consultancy fees.

Scourfield was jailed for 11 years and three months while Mills was given 15 years at Southwark Crown Court on February 2.

Michael Bancroft, 73, was jailed for 10 years, Mark Dobson, 56, for four-and-a-half years, and John Cartwright, 72, for three-and-a-half years for their various roles in the fraud between 2003 and 2007.

Mills's wife Alison, 51, also played a major role in the corruption and was sentenced to three-and-a-half years.