Lloyds Banking Group set to miss deadline for HBOS fraud compensation offers

Lloyds Banking Group is on course to miss a self-imposed June deadline to make compensation offers to victims of the HBOS fraud scandal.

Earlier this year Lloyds pledged to table compensation proposals by the end of this month, but it's understood that the lender will no longer meet its commitment.

One reason for the hold-up is due to customers taking longer than expected to provide their input to the bank, according to a person familiar with the matter.

Lloyds, which rescued HBOS at the height of the financial crisis, has set aside a £100 million pot for the 64 customers affected by the fraud, which took place between 2003 and 2007 at the hands of former HBOS Reading staff.

The corrupt financiers were jailed earlier this year for the £245 million loans scam that destroyed several businesses, before they squandered the profits on high-end prostitutes and luxury holidays.

Victims have been asked to provide detailed input into the review, not only covering the economic losses they have incurred, but also highlighting indirect losses such as legal fees and other personal costs.

Lloyds would not disclose how many compensation offers have been made, but it has now emerged that only one victim has received compensation so far.

Among the victims is former Deal Or No Deal host Noel Edmonds, who launched a £50 million-plus compensation claim against the lender in May.

Mr Edmonds has accused Lloyds of “foot dragging” over compensation payouts to fraud victims, and has also admitted he came close to taking his own life after the financial fraud helped destroy his former business Unique Group.

As part of his campaign, Mr Edmonds has set up a website - www.banklloyds.claims - which features an “honesty countdown” clock tracking the amount of time left for compensation offers to be made based on the bank's timeline.

Mr Edmonds' solicitor Jonathan Coad, from Keystone Law, said that the compensation scheme has been designed to ensure the fraud victims have “no possibility” of recovering fair redress “for the misery and financial loss which HBOS inflicted on them”.

Mr Edmonds is also calling on Professor Russel Griggs, the independent reviewer of the compensation process, to quit.

A spokesman for Lloyds Banking Group said: “Where customers have already provided information, we remain on track to make compensation offers by the end of June and we are pleased to confirm the first offers have already been made.

“But we recognise that some customers may need more time, to provide input into the review, and we want them to take that time.

“Once we have received their information we will move as quickly as possible to compensation offers and rapid payment.

“Our focus is on swift, fair and appropriate compensation.