The EACTP responds to the HBOS Reading Fraud Settlement Decision
This week, after years of campaigning, an acceptable compensation package has been proposed to redress the losses incurred by hundreds of business owners who lost life-changing sums of money when their businesses were embroiled in the HBOS Reading scandal between 2003 and 2007.
Retired High Court judge David Foskett, who chairs the panel established to recommend remedies to the deficiencies in the original compensation scheme, will offer each victim £3 million in compensation. The lump sum would be compensation in exchange for settling claims and could lead to a compensation bill for Lloyds of around £600 million.
In recent years, the matter was given attention by the APPG for Fair Business Banking, led by Kevin Hollingrake MP, in its report: ‘Resolving Insolvency: Restoring confidence in the system’ where the report drew attention to the failure of Insolvency Practitioners, investigating accountants and accountants to have discerned or reported the fraud and/or money laundering.
Now, after many years of inadequate reviews and desultory offers of compensation, the EACTP welcomes this attempt at a conclusion to the matter which should have been closed many years ago.
This was a fraud that many consider to be one of the most disgraceful and corrupt banking scandals in British history and it highlighted a series of failures and control weaknesses within bank systems and procedures.
In particular, the use of unqualified so-called ‘turnaround consultants’ who drove viable businesses to insolvency in order to reap high fees also highlights the importance of using qualified, accredited turnaround professionals.
For years the EACTP has been strongly campaigning for formal recognition of Certified Turnaround Professionals (CTPs) and for banks to be required to use CTPs who adhere to strict ethical standards and codes of conduct, who preserve going concern value, who promote turnaround ahead of insolvency, and who stand for integrity, quality and good practice.
HBOS Reading Scandal - Background
Between 2003 and 2007, numerous companies were driven into insolvency by collusion between a corrupt bank officer and corrupt ´turnaround consultants´ which resulted in exorbitant fees and kickbacks to the bank officer which ultimately drove viable but struggling companies into insolvency with significant losses to company owners.
The fraud involved small business owners being transferred to HBOS' corporate division, headquartered at its Reading regional HQ, and classified as 'high risk' - even where they had never missed a repayment.
As a condition of the bank's continued support the head of the Bank's Impaired Assets Division based in Reading, Lynden Scourfield, would then require business owners to appoint his preferred ‘turnaround consultants’ Quayside Corporate Services (QCS).
Unqualified and unethical, over a period of many years, Lyndon Scourfield and his fellow co-conspirators defrauded and destroyed many viable, but vulnerable, business customers.
Quayside Corporate Services, who claimed to be turnaround consultants, charged exorbitant, fictitious consultancy fees to bleed companies dry.
They also worked to abuse overdraft facilities and then pick off company assets through captive liquidations or administrations.
In 2007, the first allegations about the branch were made to the FSA, Serious Fraud Office and Treasury but it wasn’t until 2010 when Thames Valley Police were pushed by an action group of bankrupt shareholders to take criminal action.
In 2017, Lyndon Scourfield and Mark Dobson, both directors in HBOS’ Impaired Assets Division in Reading, together with David Mills, Alison Mills, Michael Bancroft and John Cartwright of Quayside Corporate Services, were jailed for their part in the fraud.
Since then, however, Lloyds has dragged heels on any form of financial compensation despite acres of adverse press reporting.
This week’s compensation announcement is therefore a welcome attempt to settle the matter and compensate the victims after many years without satisfaction.
For further comment from the EACTP please contact Simon C Jones, Director of the EACTP:
Email: eactpmarcomms@turnaround.org
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