Regulator cracks down on fraud
Bank of Scotland fined £45.5m over Reading scandal
A fine imposed on the bank was reduced after it agreed to early settlement (pic: Terry Murden)
Bank of Scotland has been fined £45.5m by the financial regulator for delaying disclosure of information on the £245m fraud scandal at its Reading branch.
HBOS, the bank created by the merger of Halifax and Bank of Scotland, first identified suspicious behaviour in the team handling struggling businesses in early 2007 but did not notify regulators fully until July 2009.
The bank, now owned by Lloyds Banking Group, had “risked substantial prejudice to the interests of justice” by withholding information, said the Financial Conduct Authority.
The scandal left hundreds of people in severe financial difficulties. The fine was reduced by almost £20m because the bank agreed to settle. Victims, however, have criticised the lengthy delays in paying compensation and the derisory sums offered, which range from less than £100,000 to more than £5m.
Mark Steward executive director of enforcement and market oversight at the FCA, said: “Bank of Scotland failed to alert the regulator and the police about suspicions of fraud at its Reading branch when those suspicions first became apparent.”
The FCA also banned four individuals from working in financial services two years after they were convicted of fraud and sent to prison. They are Lynden Scourfield, Mark Dobson, Alison Mills and David Mills.
John Varley, the former chief executive of Barclays, has been acquitted of charges of conspiracy to commit fraud.
The Court of Appeal declined an application by the Serious Fraud Office to overturn a decision by Mr Justice Robert Jay that there was insufficient evidence against Mr Varley.
However, the court upheld the SFO’s appeal in respect of the other three defendants, Roger Jenkins, Tom Kalaris and Richard Boath, who will now face a retrial.