Lloyds Bank appoints judge to review HBOS bribery and sex parties scandal

Lloyds Banking Group has appointed a retired high court judge to rule on whether the HBOS scandal was properly investigated by the bank.

The lender hired Dame Linda Dobbs because of "her considerable experience of working on fraud cases and track record of chairing enquiries".

She will assess the bank's conduct following its acquisition of HBOS in January 2009, through to the conclusion of the criminal trial on 30 January 2017.

Lloyds said it would set aside £100m earlier this month to pay compensation to 64 firms, who were victims of the HBOS Reading bribery scandal.

The bank has already written off about £250m of fraudulent loans made in the scandal, which in February saw six people, including two former HBOS employees, being jailed for a total of just under 48 years.

Watchdog the Financial Conduct Authority (FCA) earlier this month resumed a probe that it had suspended in 2013 while Thames Valley Police conducted its own six-year investigation into the scam, which resulted in this year's convictions.

The FCA investigation will look at what HBOS knew about the fraud at its Reading branch. Lloyds added it will hand over the findings of its own probe to the FCA.

The Reading scam centred on small businesses that had run into trouble and took place between 2003 and 2007, before Lloyds rescued HBOS, resulting in a disastrous takeover in 2009 during the financial crisis.

It involved bribery with sex parties, luxury holidays, expensive watches and cash to refer companies that were HBOS clients to a consultancy firm called Quayside Corporate Services (QCS). The troubled businesses were then asset-stripped by QCS.