FCA response to the Cranston Review

We welcome and thank Sir Ross Cranston for his report, his findings and his recommendations on the methodology and process used by Lloyds Banking Group (LBG) to deal with the consequences of the fraud at HBOS Reading on its customers.

We are disappointed that, after such a long period of time, the consequences of the HBOS Reading fraud for customers have not yet been properly remediated by LBG. 

Sir Ross’s inquiry was instigated by the FCA after listening to feedback and concerns from HBOS Reading customers, as it is vitally important that customers have confidence they have been treated fairly and their claims are assessed thoroughly. 

While finding that some aspects of LBG’s approach were reasonable, Sir Ross has found serious flaws in important aspects of the approach taken by LBG, including failures to adequately assess claims for direct and consequential losses, the exclusion of some customers from the review and inconsistency in the way some customers were treated in respect of claims for distress and inconvenience. 

These failings need to be addressed by LBG quickly.  Sir Ross has made a number of recommendations to achieve that and we will ensure LBG implements them in full as soon as possible. 

We will also require LBG senior management to explain how and why the failings identified by Sir Ross occurred in the first place. We will consider what further action may be required in light of those answers.