Lawyers representing Noel Edmonds have hit out at Lloyds Banking Group’s proposed compensation scheme for victims of a fraud at the bank’s HBOS Reading arm.
The TV presenter’s lawyers have written a lengthy letter to Prof Russel Griggs, appointed by Lloyds in March to review the level of compensation it intends to award to 64 victims of the fraud from a £100m pot it has set aside, calling the scheme a “sham”.
The letter, seen by the Guardian, claims that fraud victims are being shortchanged because the bank is determining the payouts with no independent scrutiny, and that Griggs lacks the financial expertise to ensure they are fair.
“You are entirely dependent on what you are told by Lloyds in assessing the level of compensation that should be paid to fraud victims, and lack either expertise of your own or access to independent experts to assist you in your supervisory role in the review,” said Edmonds’ lawyer Jonathan Coad, of Keystone Law.
“There appears to be no proper means of your making an independent assessment. It is difficult to see your role at present as much more than merely the applier of a rubber stamp on a pre-determined level of compensation which has been set by LBG [Lloyds Banking Group] itself. This renders the entire review scheme a mere sham which has been concocted primarily to preserve LBG’s profit margin and share price.”
Coad said that while Edmonds – a former Radio 1 DJ, children’s TV presenter and host of quiz shows including Deal or No Deal – had the financial backing and media clout to challenge Lloyds over his own case, most other claimants who had had their lives ruined by the £245m fraud could not afford to do likewise.
He added that the questionnaire provided to claimants, upon which Lloyds will determine payout levels, required significant financial expertise, and that it was “plainly essential” that the bank make an independent expert available to all claimants.
“Conducting the review process without the input of a forensic accountant is akin to seeking to assess the extent of injuries of crash victims without the contribution of a doctor,” said Coad. “I very much doubt if any but a tiny minority of them would be able to fund that advice themselves in the face of LBG’s refusal to do so. An independent forensic accountant [would] permit fraud victims and their professional advisers to judge whether the offer that LBG ultimately makes by way of compensation is fair and equitable.”
Coad also said Lloyds lacked the expertise to deliver on a promise to compensate victims not only for financial losses but for the distress and anguish caused by the scam.
“There appears to be neither an objective measure nor any professional expertise whatsoever to assess a suitable sum to compensate fraud victims for the distress, anguish, reputational damage, stigma and personal tragedy that the frauds at issue have inflicted,” said Coad.
Edmonds is seeking £73m in compensation for what he claims is the destruction of his Unique business empire, as well as for public humiliation and damage to his reputation.
Edmonds says he was a client of the former HBOS employee Mark Dobson, who was sentenced to four and a half years in prison along with five others after a jury heard they spent the proceeds of their fraudulent activities on superyachts and sex parties, while destroying businesses to which they had lent money.
Lloyds has insisted it will make payments to victims by the end of June. The fraud took place in the run-up to Lloyds’ rescue of HBOS during the 2008 banking crisis.
Coad said Edmonds had litigation funding in place so if the bank’s compensation scheme was not revised to make it fair for victims he would take his case to court.
