Our task is to assess and (where applicable) make an award for direct and consequential losses (‘D & C losses’ ) suffered by an eligible customer of Lloyds/HBOS/BOS (‘the Bank’ ) who was a victim of the fraudulent activity perpetrated through the HBOS Impaired Assets London and South East unit based from offices in Reading and Bishopsgate, London (the ‘IAR’) by Lynden Scourfield or Mark Dobson and/or the company called Quayside Corporate Services Limited (‘QCS’), and/or any of its Associates, (the ‘IAR Fraud’ ).
Our objective is to consider any Customer’s case through a non-legalistic and fair process and to make our decisions in a generous, fair and common-sense manner.
We want to complete the process for everyone as quickly as we reasonably can, but we need to balance this objective against the need to give each Customer’s case careful and conscientious consideration.
Recognising that the process can take a long time and can cause anxiety and uncertainty for Customers, in 2022 we introduced an alternative option for those Customers whom we can conclude are a victim of the IAR Fraud.
When this arises we will issue a Victim Status Decision. The Customer can then choose whether:
to accept a Fixed Sum Award, without having their losses, if any, assessed, or
The Customer Journey through our process is shown here.
Prioritisation of cases
More than 200 individual Customers have opted into the Re-Review process. Our approach is to prioritise the most urgent cases, considering serious physical illness, chronic or acute mental ill health, severe financial distress and advanced age. Understandably, everyone wants their case dealt with as soon as possible, not least because the fraud occurred so many years ago and Customers want to finally draw a line under it. We understand that fully.
We are keenly aware that, for some Customers, the thought of yet another ‘process’ may be very unwelcome. We fully respect Customers’ preferences as to whether, and to what extent, they wish to engage with us at any stage. The process recommended by Sir Ross has enabled us in appropriate cases to minimise the need for Customer input up to the ‘minded-to’ stage (described below) to alleviate the burden on any Customer who would prefer not to play a particularly active part.
The inbuilt flexibility of this style of process allows us the discretion to adapt our approach if we feel it necessary to do so in the interests of fairness or efficiency in an individual case. It also allows us to ask for further information or documentation, either from the Customer or the Bank, at any stage, and Sir Ross’ recommendations provide a discretion for us to go about this as we see fit.
This flexible approach should be a positive advantage for all concerned. We appreciate it when Customers, their advisers and the Bank cooperate with our work in a constructive and positive spirit.
Following the introduction of the Fixed Sum Award option in June 2022, our information-gathering stage will fall into two broad stages: (i) enquiries into victim status; and (ii) in the event of a positive decision regarding victim status, enquiries into whether any D & C losses have been suffered and, if so, how much (please note, this second stage will only arise if the Customer remains in the Re-Review after receiving a Victim Status Decision, as explained below).
In order to consider a Customer’s victim status, we will firstly consider the documents already available to us. This comprises the Customer’s previous submissions in the Customer Review and the Customer Review File from the Bank (see below for more details).
In some cases, we may be able to conclude that a Customer was a ‘victim’, as explained further below, without needing any further information. In other cases, we may have queries for the Customer during our enquiries into victim status and it may also be useful for us or our team to meet the Customer if the Customer is willing to do so. Our Case Managers will be in touch with the Customer to seek the relevant information or arrange a meeting if needed. We explain how this will work below. There is no need to contact us with further information at this stage.
We say more about what is involved in the Victim Status stage below.
In the event that a Customer whom we have concluded to be a victim remains in the Re-Review after receiving a Victim Status Decision, we will go on to consider the Customer’s D & C losses, if any. This will entail conducting a detailed analysis to identify the first instance of fraud in that Customer’s case and the first time it had a financial impact on the Customer or Company. We must then analyse the Customer’s financial position arising from the IAR Fraud and consider what the position might have been had the fraud never occurred. The way we go about this is set out in ‘The IAR Fraud and the Causation of Loss’ and ‘Quantifying D & C losses’.
The Panel consider a Customer’s previous submissions in the Customer Review
At the outset of the information-gathering stage, we will identify the way in which a Customer advanced their claim at the time of the Customer Review by reference solely to information/documentation supplied at the time by the Customer or on their behalf. If no submission was made at the time, the Customer will not be at a disadvantage in the Re-Review process, as we will always investigate the Customer’s position.
We have been made aware that some Customers may have information that they consider relevant to the Re-Review process that was not advanced at the time of the Customer Review. Our Case Managers will seek the required information from the Customer at an appropriate time.
Panel consider the Customer Review File provided by the Bank
We will consider the materials contained and referred to in the Customer Review File, including the Bank’s assessment of a Customer’s claim. We will test and evaluate the Bank’s assessment and, where necessary, discuss it and any relevant documents with the Customer.
We have been made aware that some Customers have expressed deep reservations about the completeness and reliability of the Customer Review File. This will be taken into account where appropriate, as will the conclusions of Sir Ross in this respect (see Explanatory notes on the Customer Review File).
If a Customer, in responding to an information request, alerts us to the existence of a document that we are persuaded is potentially relevant and that has not been referred to in the Customer Review File, we will undertake a reasonable, proportionate and focused search of the Bank’s wider archives and database, provided that sufficiently specific search parameters and directions have been provided by the Customer. We will help to formulate and refine the search parameters where doing so will assist the Customer.
The Panel’s Case Manager meets with the Customer, if the Customer wishes
If there comes a point during the information-gathering stage where we or our team would find it useful to discuss the Customer’s case with them, an invitation will first be extended to the Customer to meet the Panel’s Case Manager if the Customer wishes. This meeting is by no means an obligatory part of the process for the Customer. We understand that some Customers have told their story many times before and may not wish to do so again. Our Case Managers will meet with those Customers who choose to do so during the information-gathering stage.
We and our team will likely have some specific queries for the Customer, which the Case Manager or members of the team will raise at the meeting and, depending on the subject matter, may be flagged in advance. However, the meeting will enable the Customer to say what they wish concerning the relevant issues from their perspective, including updating our team on any new relevant information since receiving their outcome in the Customer Review, and with the benefit of having seen our published assessment methodology. If the Customer is not able to recall a specific point but later remembers something of relevance, the Customer is of course free to contact the Case Manager to bring any such matter to the attention of our team after the meeting.
If the Customer wishes to meet us, the Panel, they can indicate this to the Case Manager and we will arrange a suitable time for this.
Meetings are typically conducted online and remotely by way of a video conference call. If the Customer would prefer to have a face-to-face meeting we will of course do our best to accommodate this. We and our team are also prepared to travel to see a Customer if this is requested.
If the Customer would like to be accompanied in a meeting by a “Customer Advocate” (as mentioned by Sir Ross in his final report), they may do so. This can be anyone who the Customer would like to accompany them during the meeting. The Panel recognises that a number of Customers have been supported throughout the long history of this affair by their lawyer. If the Customer would like their lawyer to be their “Customer Advocate”, that is acceptable.
Customers may wish to engage a professional adviser to assist them to respond to queries that arise or to attend meetings during the information-gathering stage. We do not regard legal submissions as necessary in the information-gathering stage and recommend such submissions are produced only after we have issued a provisional decision in a Customer’s case (our ‘minded-to’ decision). We say more about the role of lawyers and other professional advisers and the circumstances in which funding will be made available to cover their fees in the section ‘Professional advisers and their fees’.
We will answer this question by reference to the definition of ‘victim status’, which can be found here. We may be able to decide that a Customer was a victim of the IAR Fraud and issue a Victim Status Decision without any submissions from the Customer or the Customer’s representatives over and above what was submitted in the Customer Review.
We will request further information where required and the Customer will be given the opportunity to provide this. If professional support is needed for this, funding will be available as described here.
Where we can conclude that the Customer was a victim of the IAR Fraud the Customer will be informed by way of a Victim Status Decision. This will include a summary of the reasons why we have made the decision. In these cases the process will follow the outline described below, under the heading ‘Our Victim Status Decision’.
In cases in which we cannot, without further inquiry, conclude that the Customer was a victim of the IAR Fraud the case will continue within the Panel’s information-gathering stage. In cases in which we cannot, on the information available to us in the Information Gathering Stage conclude that the Customer was a victim of the IAR Fraud, we will proceed to issue a minded-to’ decision in which this provisional decision will be set out. It will be open to challenge by the Customer as with any 'minded-to’ decision.
We will not reach a Final Decision concluding that a Customer was not a victim of the IAR Fraud without:
having first conducted a full inquiry;
giving that Customer the opportunity to make representations and challenge the 'minded-to’ decision. If the Customer requires professional support for this, funding will be available as described here.
If we reach a point in our information-gathering stage where we are able to conclude that a Customer was a victim of the IAR Fraud we will send that Customer a Victim Status Decision.
The Bank may challenge this Victim Status Decision only if there is an obvious error of basic fact on the face of the decision. The Bank would be expected to highlight any such error within 2 days of the Victim Status Decision being issued.
Provided there is no sustainable challenge by the Bank, the Customer will be offered the option of a Fixed Sum Award.
If the Customer wishes to accept the Fixed Sum Award, they will be required to notify us in writing that that is the case within one month of receipt of their Victim Status Decision (this period is called ‘the decision window’, (with the exact date being specified by us when the Victim Status Decision is issued).
The Customer will be required to sign an agreement with the Bank to confirm their acceptance of the Fixed Sum Award.
The Fixed Sum Award is a one off, time limited option. After the end of the decision window, the option to accept the Fixed Sum Award will no longer be available.
If the Customer wishes to have independent support in order to decide whether or not to accept the Fixed Sum Award, they are entitled to the services of an independent facilitator appointed by us, at no cost to the Customer. The Bank will also fund legal advice and independent financial advice in relation to consideration of the Fixed Sum Award option, up to a combined total of £10,000 plus VAT.
If the Customer notifies us in writing that they accept the Fixed Sum Award within the decision window, the decision will be final and binding on the Bank and the Customer once the agreement with the Bank is concluded and the Customer will automatically exit the Re-Review at that point.
If the Customer does not accept the Fixed Sum Award within the decision window:
the Customer will remain in the Re-Review and will longer have the option to accept the Fixed Sum Award; and
the Customer will receive an interim payment of £250,000 net of any tax payable. This interim payment will be set off against the sum awarded by us, if higher, in the Final Decision.
The amount of the provisional award may be a sum less than the Fixed Sum Award or (where we conclude that the Customer sustained no D & C losses as a result of the IAR Fraud) no sum at all. The same can be true with any award in the Final Decision. If that is the case the Customer will retain only the £250,000 interim payment.
Our Guidance on the Fixed Sum Award can be found here.
The ‘minded-to’ decision will comprise our provisional conclusion that either:
the Customer was not a victim of the IAR Fraud; or
where the Customer was a victim of the IAR Fraud (and has remained in the Re-Review after receiving a Victim Status Decision), whether the Customer suffered D&C losses as a result of the IAR Fraud and, if so, the amount of compensation we are minded to award.
We will send the Customer and the Bank our provisional, ‘minded-to’ decision. This will include a clear explanation of the basis for it. We will attach a copy of all the documents on which we have relied in reaching our provisional decision.
Following a ‘minded-to’ decision which states our intention to award the Customer financial compensation, the Customer will receive an interim payment in the circumstances outlined here. This further interim payment will be set off against the sum awarded (if any) in the Final Decision.
The Customer and the Bank each have the opportunity to review and respond to the ‘minded-to’ decision. The Customer will be able to see the documents together with our analysis of them and will have the opportunity to correct any errors or omissions as part of their challenge. More detail can be found here.
This will also be the opportunity for the Bank to see any new information gathered by us since the Customer Review and our assessment of it.
If both the Customer and the Bank accept the decision, then the ‘minded-to’ decision will become our Final Decision. Ordinarily, but subject our discretion:
If the Customer accepts the decision but the Bank raises objections, we will then give the Customer an opportunity to respond to the Bank’s reasons. That response will be the final submission before we make makes the final decision.
If the Customer is dissatisfied with the ‘minded-to’ decision, but the Bank accepts it, the Bank will have the opportunity to respond to the Customer’s reasons.
If both the Customer and the Bank are dissatisfied with the ‘minded-to’ decision, we will then give the Customer the right of reply to the Bank’s submission and that again will be the final submission before the Panel makes the final decision.
Sir Ross recognised that a Customer might, after they have received the ‘minded-to’ decision, require legal advice. Peter Hurst considers requests for funding of any legal fees (over and above a fixed allowance) on our behalf.
Sir Ross also recognised that in some cases the provision of financial advice such as forensic accountancy advice might, at that stage, be appropriate at our discretion. So far as financial advice is concerned at this stage (i.e. once the ‘minded-to’ decision has been issued), Peter Hurst considers requests for assistance of this nature on a case-by-case basis. If he considers it reasonably necessary, he will advise the Bank accordingly that it should fund the reasonable costs of that assistance.
We have provided a fuller explanation of both the rationale for, and the process for, seeking funding for professional assistance in our separate notes on ‘Professional advisers and their fees’.
Where we recommend a provisional award for D & C losses in our ‘minded-to’ Decision, Compensatory Interest at 8% will be applied to the amount of the provisional award up to the date of payment of any final award following the issue of a Final Decision, subject to the time-limit described below. For any interim payment made, the Compensatory Interest will run to the date of the interim payment.
If a Customer takes longer than two months to produce their response to the ‘minded-to’ Decision (or their response to the Bank’s challenge, if there is one) the Compensatory Interest will cease to accrue after that two-month period has elapsed unless there are good reasons why the period needs to be extended (for example a Customer being unwell).
We recommend Customers alert their professional advisers (if any) to this two-month window so they can confirm to the Customer that they are able to produce submissions on the Customer’s behalf within this timeframe. The two-month period will automatically be extended to add the time necessary to allow us to consider any challenges raised by the Bank and the Customer and issue our Final Decision. The Customer will therefore be compensated for any delay in receiving a final award where this is not caused by a delay on the part of the Customer.
Once the Customer and the Bank have each had the opportunity to challenge or respond to our ‘minded-to’ decision, we will then review those submissions and produce our final reasoned decision, having taken all the material and information received to date into account. Again, this decision will be ours and ours alone.
This decision will be final and binding on both the Customer and the Bank.