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British MPs urge Lloyds CEO to resign over handling of fraud


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British MPs urge Lloyds CEO to resign over handling of fraud

Several British members of Parliament called for the resignation of Lloyds Banking Group PLC CEO António Horta-Osório over the lender's handling of fraud at HBOS PLC's Reading unit that affected a large number of small business customers, the Financial Times reported.

Kevin Hollinrake, who chairs the All-Party Parliamentary Group on Fair Business Banking, accused the lender of mistreating former Lloyds employee Sally Masterton, who previously detailed the crimes in a report, and of creating a biased compensation scheme for victims of the fraud.

Given the accusations, Hollinrake said Horta-Osório's role had become "untenable" and urged the U.K. Financial Conduct Authority to look into whether Horta-Osório breached his responsibilities under the regulator's Senior Managers' Regime, according to the FT.

Horta-Osório had already been CEO of Lloyds when Masterton wrote the report in 2013, although he had yet to join the bank when the fraud took place, the FT noted.

Masterton's report alleged that HBOS executives knew as early as 2004 that many business clients were ensnared in fraudulent lending practices, leading to the demise of many small companies, and had conspired to conceal it. The report also claimed that Lloyds found evidence of "serious financial irregularities" at HBOS at the time of its takeover in 2009 but failed to disclose it to its shareholders.

In November, Lloyds apologized to Masterton and paid her financial compensation for how she was treated after writing the report.