Bank chiefs face grilling from MPs over HBOS Reading fraud scandal

Andrew Bailey and Antonio Horta-Osorio face a grilling from MPs over the aftermath of the HBOS Reading scandal.

Bank of England governor Bailey, who was chief executive of the Financial Conduct Authority (FCA) when the fraud was uncovered, and Horta-Osorio, boss of HBOS’s owner Lloyds, are accused of ‘mistreating’ victims and failing to oversee an adequate compensation scheme.

Horta-Osorio has also been slapped with a formal complaint from the influential All Party Parliamentary Group (APPG) on Fair Business Banking, which wrote to the FCA regarding his conduct.

Firing line: Bank of England Governor Andrew Bailey (left) and Lloyds Bank boss Antonio Horta-Osorio (right) are to be grilled over the aftermath of the HBOS Reading scandal

The HBOS Reading scandal is separate to the crisis that brought HBOS to the brink of collapse in 2008, which is still being investigated by the FCA.

Between 2003 and 2007 six bankers and advisers connected to the Reading branch milked millions of pounds from business customers to go on luxury holidays and pay for prostitutes.

Lloyds, which bought HBOS in 2008, promised to compensate the near-200 victims who lost their livelihoods. 

But a review of the compensation process by lawyer Sir Ross Cranston in 2019 found it was not ‘fair or reasonable’.

Lloyds set up an ongoing independent panel, chaired by retired judge Sir David Foskett, to review all the victim’s claims.

But in a letter sent in December to FCA boss Nikhil Rathi, the APPG’s chairman Kevin Hollinrake said there were ‘similar ongoing denials of responsibility by the bank’ in the new review.

Lloyds, the FCA and the Bank of England declined to comment.