Lloyds Bank has said it will reopen its compensation scheme for dozens of people affected by its Reading fraud scandal, after an independent review found the original payouts were "neither fair nor reasonable".
It comes after the lender closed its £100m+ compensation scheme earlier this year - putting an end to one of Britain’s biggest banking scandals to date.
Sir Ross Cranston, a former high court judge who ran the independent inquiry, said the bank’s review of the fraud had "serious shortcomings".
He said Lloyds' "approach to assessing direct and consequential loss caused by the criminal misconduct", was particularly lacking.
Six people, including two former HBOS employees, were jailed in 2017 over a £245million loan scam orchestrated from the Reading branch.
They were found guilty of targeting - and pushing - business customers into failure between 2003 and 2007 by referring clients to a turnaround consultancy that left them struggling in debt.
The fraudsters then spent the proceeds on a lifestyle filled with superyachts and luxury holidays.
Lloyds originally offered compensation to 71 business customers. It paid out more than £102million, with individuals offered packages ranging from less than £100,000 to more than £5million.
Among those affected was TV presenter Noel Edmonds, who claimed HBOS Reading destroyed his business. He later reached a multi-million-pound compensation deal with the bank.
Now, former HBOS Reading customers have accused Lloyds of failing to offer fair compensation in light of the real losses they suffered, refusing to discuss the basis for its decisions and not offering any opportunity for appeal.
The Lloyds Banking Group chief executive, António Horta-Osório, said: "Our intention when we set up the Griggs Review was to deliver fair and reasonable outcomes for customers in a swift way that would be more generous than through the courts.
"Sir Ross has concluded that customers may not have received fair outcomes due to flaws in the review process. I am very sorry that this has happened.
"The Group is committed to act on the recommendations made by Sir Ross, and will fully support giving customers the option of a voluntary re-review of direct and consequential losses.
"We will be guided by the victims, the APPG, the SME Alliance, Sir Ross and our regulators on the best way to achieve that. I want to emphasise my personal commitment to ensuring that those customers affected by the actions of individuals who have since been jailed for their crimes will get their claims properly addressed in an open and transparent manner."
