Lloyds Banking Group PLC promised a re-review of claims for customers affected in the £1 billion fraud at unit HBOS PLC's Reading branch after a review ordered by regulators found "serious shortcomings" in the compensation process.
The review by law professor Ross Cranston noted that the bank compensated customers generously but "the methodology and process of the customer review did not achieve the purpose of delivering fair and reasonable offers of compensation."
Cranston added that it is possible that many customers were adequately compensated and that the reassessment process does not result in a "materially different outcome for many customers."
Lloyds CEO Antonio Horta-Osorio said he was very sorry that the fraud victims may not have been fairly compensated and that the bank agrees with Cranston's findings that its methodology was flawed. The bank committed to implementing the review's recommendations "in full" and said it will give affected customers the option of a voluntary independent re-review of direct and consequential losses, according to the Dec. 10 statement.
In response to the report, the U.K. Financial Conduct Authority said it will ensure full implementation of the recommendations at Lloyds.
The FCA added that it will also seek out an explanation from the bank's senior management as to how and why the failings happened, with further action to be taken based on those explanations.