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Lloyds Banking Group has appointed a retired high court judge to assess whether the HBoS scandal was investigated and reported properly at the time by Lloyds following its takeover of the bank.
The state-backed lender has hired Dame Linda Dobbs because of her “considerable experience” of working on fraud cases and chairing inquiries.
The independent review will cover the eight-year period following Lloyds’ acquisition of HBoS which was finalised in early 2009 through to the end of the criminal trial on 30 January 2017. Findings of the examination will then be passed to the Financial Conduct Authority.
Lloyds also announced that it expects to start making compensation pay-outs to victims in late May. The bank set aside about £100m earlier this month to compensate 64 customers. The bank will make a provision in its first-quarter earnings results tomorrow.
The latest development comes after the Financial Conduct Authority reopened its probe earlier this month into what HBoS knew about the fraud at its Reading branch.
The scam, which according to the presiding judge “ripped apart small businesses” was orchestrated by Lynden Scourfield, the lead director of HBoS’s impaired-assets division in Reading. It forced HBOS to write off at least £245m in loans.
Lloyds appointed Professor Russel Griggs earlier this year as the independent reviewer to determine redress payments to affected customers.