Questions mount as HBOS scandal victims await delayed report on alleged cover-up

More than seven years after Dame Linda Dobbs was appointed to investigate whether Lloyds Banking Group covered up a £1 billion fraud scandal at HBOS, the victims of the scandal are still waiting for answers.

The review, initially expected to take a matter of months, now risks becoming one of the slowest official reports in British history, with growing accusations that it could be compounding the alleged cover-up.

Dame Linda Dobbs, a former High Court judge, was tasked in April 2017 with examining Lloyds’ response to a fraud linked to the Reading branch of HBOS, which the bank had acquired in 2009. The fraud involved bankers and consultants exploiting reckless credit policies, leading to the collapse of several small and medium-sized businesses. Six people were jailed in 2017 for their roles in the scam, including Lynden Scourfield, a banker at HBOS, and David Mills, the ringleader of Quayside Corporate Services, a consultancy firm that exploited HBOS clients.

Despite Lloyds eventually acknowledging that victims suffered due to Quayside’s actions, many victims, including media personality Noel Edmonds, fear that the drawn-out review process is protecting those at the top from accountability. Edmonds, whose company Unique Group was a victim, has compared the Dobbs review to the infamously lengthy Edinburgh Tram inquiry, which took nearly nine years and became more controversial than the issue it was set up to investigate.

According to a senior banking source, Lloyds and HBOS executives were aware of the issues at the Reading branch as early as 2007 but chose to pursue debts from affected businesses rather than addressing the fraud. “Instead of owning up and redressing the issue, they decided the best option was to further destroy businesses hoping that would get rid of the problem. It seems quite clear-cut to me,” the source said.

Paul and Nikki Turner, owners of the music publishing business Zenith, which was ruined by the fraud, expressed their disillusionment with the review’s progress, accusing Lloyds of hoping the truth would never emerge. In correspondence with the review’s counsel, Adam Wiseman KC, the Turners questioned whether they had misplaced their faith in the review’s integrity. In response, Dobbs reassured them that her “no stone unturned” approach remained the objective, though the review is still accepting new information as of this year.

The Dobbs review is investigating claims that Lloyds covered up the HBOS fraud, frustrated police investigations, and exacerbated the suffering of victims. The scope of the inquiry is extensive, involving oral and written evidence from numerous witnesses, and a review of hundreds of thousands of documents spanning nearly two decades. However, as a non-statutory inquiry, Dobbs cannot compel witnesses to participate, which has contributed to delays.

The review’s progress has been slow, with complex and time-consuming processes for handling confidential documents covered by legal professional privilege, as well as difficulties coordinating witness availability. Although the drafting of the review has begun, significant analysis is still outstanding, prompting calls from within the industry for more transparency. Some victims have suggested that Dobbs should publish an interim summary to provide clarity on the review’s findings so far.

Mark Brown, General Secretary of BTU, the independent trade union for Lloyds staff, criticised the protracted nature of the inquiry and suggested that Lloyds might be content to see the investigation “kicked into the long grass.” He urged Dobbs to name those responsible for delays and to hold Lloyds accountable for its role in prolonging the review.

Lloyds has already incurred £1.3 billion in charges related to the scandal, including the costs of compensation schemes and the ongoing review. The bank maintains that it is cooperating fully with the inquiry and has apologised to customers affected by the fraud. A spokesman for Lloyds stated, “Our intention has always been, and remains, to provide fair and generous compensation.” The bank has committed to providing a copy of the final report to the Treasury Select Committee once completed.

Dame Linda Dobbs remains adamant about the importance of a thorough investigation, stating, “Where serious allegations have been raised about the adequacy of past investigations, I owe it to those victims to conduct a comprehensive inquiry and reach robust conclusions. That means no short cuts.” As the review nears its final stages, the victims and the public continue to await a full account of what went wrong and who should be held accountable.

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Questions mount as HBOS scandal victims await delayed report on alleged cover-up