UK House of Commons Debate sparks potential SFO Inquiry into Lloyds Bank

The Financial Times has reported that the Serious Fraud Office in the UK is giving “active consideration” to opening an inquiry into Lloyds Bank, following a debate in the UK House of Commons on Wednesday.

In her submissions, Jo Stevens, Labour MP for Cardiff, alleged that:

  • the Bank had specifically targeted small business customers on lower loan rates in order to push them into administration for its own financial gain; and
  • that the Bank used a mechanism known as “down-valuation” to intentionally devalue borrowers’ properties. She stated that this had two consequences:
    • Lloyds was able to receive a higher bailout amount from the UK government; and
    • individual customers were held to be in breach of their loan conditions which enabled the Bank to either renegotiate more favourable terms for itself or to eliminate its customers altogether, by appointing receivers.

During the debate, Ms. Stevens gave  examples of her own constituents  allegedly forced out of business. She said that “the facts of the cases resemble the malpractice at Royal Bank of Scotland identified by the Tomlinson report”.

The debate followed findings by the Royal Institute of Chartered Surveyors that a recovery manager from Alder King (a property management firm) who was working on secondment in Lloyds, had accepted an appointment to foreclose on a Lloyds business borrower’s property. Ms. Stevens highlighted the potential conflict of interest in a situation where the Alder King employee had 2,400 live cases, each worth in excess of £1 million, within his recoveries department… to which, if he wished, he could appoint receivers from his own firm, Alder King.”

We will follow developments in this case.  In the meantime you can read Laura Daly’s article on the re-opening of the investigation into the allegations against RBS highlighted in the Tomlinson Report here.

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