William Dooley
Senior Associate Solicitor
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Date Published:23 Feb 2021 Last Updated:27 Jul 2021

Updates on the work of the Foskett Panel for victims of the HBOS Fraud

Banking & Finance Litigation

The Foskett Panel was announced on 3 April 2020 following Sir Ross Cranston’s recommendations for the Re-Review Process of the direct and consequential losses suffered by victims of the HBOS Impaired Assets Office based at Reading and Bishopsgate (“HBOS Fraud”).

The Cranston Review, published in December 2019, had concluded that Lloyds Banking Group’s (“Lloyds”) handling of financial (i.e. direct and consequential) loss claims in its original Customer Review following the HBOS Fraud was unsatisfactory and did not achieve the purpose of delivering fair and reasonable offers of compensation.

Scope and Assessment Methodology of the Foskett Panel (the “Panel”)

The task of the Panel is to assess and, where applicable, make an award for direct and consequential losses (“D & C losses”) suffered by an eligible customer of Lloyds who was a victim of the HBOS Fraud (‘Customer’).

There are three essential conditions for the Panel to make an award for D & C losses:

  • That the Customer became a victim of the HBOS Fraud;
  • That as a result of the HBOS Fraud, the Customer suffered D & C losses that would not have been suffered but for the HBOS Fraud (‘Causation’); and
  • That the amount of the D & C losses can be quantified (‘Quantification of Losses’).

The key question for the Panel to consider is:

What would have happened to this company but for the involvement of the fraudsters?”

In answering this, the Panel will consider whether and how a “Hypothetical Reasonable Bank” would have acted at the relevant time and by reference to the balance of probabilities, whether it is more probable than not that the Customer would have acted in a particular way in the absence of the fraud.

Panel Guidance: Quantifying D & C Losses

The Panel will compensate ALL financial losses resulting from the HBOS Fraud which are quantifiable and can be classified as direct and consequential.

The amount of D&C losses which the Panel will award is the amount required to put the customer into the financial position they would have been in if the HBOS fraud had never occurred.

Ultimately, the amount by which the Customer (including its directors/managers and shareholders) is found to be financially worse off under the Actual Scenario is the amount of D&C losses which the Panel will award.

Recent Updates

The latest update provided by the Panel was published in December 2020 in which they confirmed that work had started on the first priority group. The expectation at the time was that the Panel’s work on the second group of urgent priority cases was likely to commence around February 2021.

Furthermore, in January 2021, the APPG on Fair Business Banking submitted a formal complaint to the Financial Conduct Authority concerning the HBOS scandal. In its complaint, the APPG highlighted, amongst other things, the necessity for ex-gratia payments to be made to all victims of the HBOS scandal to compensate them for the three years delay following the original Customer Review.

Ellis Jones Clients

In addition to the Panel, there are some outstanding elements being considered by Lloyds. These include awards for debt relief decisions on company de facto directors and the eligibility for distress and inconvenience (“D&I”) payments. These decisions are subject to an appeal process undertaken by Rory Phillips QC.

Ellis Jones has been successful in achieving de facto director status for a number of victims of the HBOS Fraud who were refused entry into the Customer Review overseen by Professor Griggs. This resulted in awards being made for D&I and more importantly, these victims are now eligible for consideration in the Panel process for an assessment of their D&C losses. The majority of these customers were initially rejected as de facto directors by Lloyds.

In addition to the de facto director status successes, we have also assisted in recovering significant sums for debt relief payments for eligible customers and continue to advise and represent Clients through the HBOS Re-Review process.

How can Ellis Jones help?

If you believe you have been affected by the HBOS Reading scandal, please do not hesitate to contact the Banking and Financial Litigation Department. We have substantial experience in dealing with claims and complaints against the banks and financial institutions.

Please contact William Fox Bregman or William Dooley in the Banking and Financial Litigation team on 01202 057733 or send an email enquiry to banking@ellisjones.co.uk to discuss how we may be of assistance.