Lloyds Banking Group settle with HBOS whistleblower

Kevin Hollinrake MP, Co-Chair of the All-Party Parliamentary Group on Fair Business Banking, said: “We are, of course, pleased that an agreement has been reached and that Lloyds have apologised for their treatment of Sally Masterton, who has been treated disgracefully by the bank. But this does now raise important questions that must be answered:

Why did Lloyds deny that they had commissioned the report?

Why did they set out to destroy Sally’s reputation and credibility?

Why did they ignore the requests of Thames Valley Police officers who were investigating the HBOS fraud to have continued access to Ms Masterton and instead suspend her from her duties?

Why did they tell the FCA that Sally’s actions were not sanctioned by the bank and that there was no substance to her report?

What investigations did the Lloyds CEO and Chairman carry out into the fraud allegations contained in Sally Masterton’s report?

What investigations did the FCA carry out into the fraud allegations contained in Sally Masterton’s report?

Who was responsible for the actions or inactions above and what will Lloyds, its Chairman, Non-Executive Directors, the FCA, the Prudential Regulatory Authority and the Bank of England now do to hold those people to account?

We also need to now see a full, exhaustive investigation by the regulators and crime agencies into the alleged fraud cover-up itself, which must determine whether investors in the rights issue and takeover by Lloyds Bank in 2008/9 were themselves defrauded.

Confidence will not even start to return to the business banking sector until all these questions are answered to the satisfaction of the APPG, parliamentarians, the financial media, the SME Alliance and small business victims.

We must also remember that Lloyds has yet to provide appropriate compensation to the victims of the fraud, who have been waiting for justice for over a decade. The current redress scheme is internal, one-sided, opaque and unjust. No-one can reasonably argue that it is appropriate that a bank, senior managers of which have been found guilty of fraud and effectively admitted covering up evidence of fraud, should be allowed to handle their own compensation scheme for the victims of that fraud.”

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