Bank of Scotland has been fined
£45.5m by the Financial Conduct Authority (FCA) over its failure to report a
fraud at the Reading-based impaired assets team.

The watchdog found Lynden Scourfield, the head of the bank’s Impaired
Assets team in 2007, had been sanctioning lending beyond his authority. It also
found the bank was aware and failed to act properly.
Over the next two years, on numerous occasions, the
FCA found the bank failed properly to understand and appreciate the
significance of the information that it had identified despite clear warning
signs that fraud might have occurred.
It found there was insufficient challenge, scrutiny
or inquiry across the organisation. At no stage was all the information that
had been identified properly considered.
The FCA said there was no evidence anyone
“realised, or even thought about, the consequences of not informing the
authorities”, including how it might delay proper scrutiny of the misconduct.
In February 2017, Scourfield was sentenced to 11
years in jail, while five other individuals were also jailed for their parts in
the fraud.
At the time, Bank of Scotland was part of Halifax
Bank of Scotland (HBOS), which became part of the Lloyds Banking Group in 2009.
It was not until July 2009 that Bank of Scotland
provided the Financial Services Authority (FSA) with full disclosure in
relation to its suspicions.
Mark Steward, executive director of enforcement and
market oversight at the FCA, said: “Bank of Scotland failed to alert the
regulator and the police about suspicions of fraud at its Reading branch when
those suspicions first became apparent. Bank of Scotland’s failures caused
delays to the investigations by both the FCA and Thames Valley Police.
“There is no evidence anyone
properly addressed their mind to this matter or its consequences. The result
risked substantial prejudice to the interests of justice, delaying scrutiny of
the fraud by regulators, the start of criminal proceedings as well as the
payment of compensation to customers.”
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