MPs have called for a new investigation into Lloyds over an alleged cover-up regarding the mistreatment of small business customers by its HBOS unit.
The All-Party Parliamentary Group (APPG) on Fair Business Banking's co-chairman Kevin Hollinrake has sent a letter to Bank of England Governor Mark Carney and the Prudential Regulation Authority, accusing Lloyds executives of withholding a 2013 whistleblower report. The report's findings were not shared with the bank's board until March 2017.
The letter on behalf of the APPG also calls on the Financial Conduct Authority (FCA) to investigate Lloyds Chief Executive Antonio Horta-Osorio, claiming he knew about the ongoing fraud from 2011 onwards but failed to begin an investigation. Kevin Hollinrake is also accusing Horta-Osorio of dismissing Senior Risk Officer Sally Masterson, who wrote the whistleblower report, and preventing her from cooperating with the police.
Masterson's report alleged that before HBOS was acquired by Lloyds in 2008 HBOS executives at its Reading-based corporate division had "concealed" a fraud that stripped some customers of their assets. The fraud has already led to the imprisonment of several former executives.
In his letter, Kevin Hollinrake, Conservative MP for Thirsk and Malton , says: "The handling of the HBOS Reading fraud and the evidence of subsequent attempts to cover up the extent of fraud raises serious questions around the corporate governance and conduct of Lloyds Banking Group executive directors, including chief executive Antonio Horta-Osorio.''
In a statement, Lloyds said: "Lloyds Banking Group continues to regret and apologise for the distress caused to those customers affected by the criminal misconduct at HBOS. We have now provided compensation offers to all 71 businesses in the customer review and more than 96% of these have been accepted."
A separate inquiry into Lloyds and how much its executives knew of the HBOS fraud has been delayed until 2020. It will be conducted by retired high court judge Linda Dobbs, who will be examining what is alleged to be another example of years of concealment by a bank when it comes to large-scale internal fraud conducted by its staff.
It remains to be seen whether the compensation offered will be anywhere near enough to right the wrongs. With the FCA investigation now having resumed after the conclusion of criminal proceedings it is possible that more answers will be forthcoming.
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