Witness Calls Delayed Review of Lloyds Scandal a ‘Betrayal’

A lengthy inquiry into allegations that Lloyds Banking Group concealed a fraud scandal worth £1 billion has been described as a “betrayal” of its victims, according to testimony provided to MPs and the City’s regulatory body.

The independent review led by Dame Linda Dobbs, which focuses on Lloyds’ management of a scandal involving HBOS—a bank acquired by Lloyds in 2009—has been criticized for its slow progress, with a key witness claiming it reflects a “failure of process and accountability.”

Paul Turner, a whistleblower who played a crucial role in revealing the fraud, submitted over 100,000 documents to the review. In his correspondence to Dobbs, he urged her to cease further evidence collection, discontinue interviews, and establish a publication timeline.

Turner suggested that, now entering its ninth year, the review—one of the longest in recent UK history—was initiated with the promise of uncovering the truth, yet now risks obscuring it instead.

The investigation centers on Lloyds’ response to fraudulent activities at HBOS’s Reading branch, where bankers and consultants exploited irresponsible credit policies for personal gain. Notably, Lynden Scourfield, a banker, manipulated customers into hiring and compensating third-party consultants to maintain their banking support.

Many small and medium-sized enterprises suffered devastating consequences, with six individuals imprisoned in February 2017. Judge Martin Beddoe characterized the fallout as having left numerous victims feeling “cheated, defeated, and penniless.”

Initially commissioned in April 2017, Dobbs had anticipated the review’s completion would require only a few months.

Turner, himself a victim of the scandal, expressed frustration in his letter, stating: “The ongoing lack of meaningful progress is no longer acceptable.”

He conveyed a growing sentiment of “frustration and, increasingly, betrayal” in his appeal to expedite the review.

This correspondence has been forwarded to both the Financial Conduct Authority and the Treasury committee, which has previously pressed for accountability regarding the inquiry.

Lloyds has stated that it is extending all necessary support to the review while apologizing to affected customers for the delays related to compensation, which is separate from the review process. The bank affirmed that it would share the findings of Dobbs’s investigation with MPs.

Turner asserted, “This is no longer just a delay—it has evolved into a failure of accountability, causing injustice to those still affected by the fraud.”

He added, “Credibility has been lost. The review is now broadly viewed as a monument to stagnation rather than a pathway to justice,” according to the letter, which was reviewed by The Times.

Dame Dobbs, a former High Court judge, has expressed her commitment to uncovering the truth, citing the complexity of the task along with the sensitivity of handling legally privileged documents, an influx of new evidence, and her limitations in compelling witness testimony as factors contributing to the delays.

She acknowledged the frustration of witnesses and promised that while the review has been extensive and complicated, they are making progress as swiftly as possible. She indicated that the final stages of the inquiry are underway and a further update will be provided shortly.

In addition to assessing Lloyds’ awareness of the fraud and whether it appropriately investigated the incidents, Dobbs is also examining the bank’s compliance in reporting to regulatory authorities, potential cover-up actions, and the lessons that the lender should take from the events.

While Dobbs intends to produce a report conducive to publication, Lloyds has not committed to releasing the full findings.

Turner claimed that the evidence already available to Dobbs suffices for the review’s completion, urging her to act decisively: “The truth is that the review will only conclude when you decide it must. We implore you to make that decision now.”