Bank of Scotland failed to inform the regulators about a £245million scandal at the bank’s Reading branch which led to the imprisonment of six people. The Financial Conduct Authority (FCA) said the bank had “risked substantial prejudice to the interests of justice” by holding back the information.
The bank has been asked to pay £45.5m as a penalty for not taking adequate action over the activities of Lynden Scourfield, the head of the bank’s Impaired Assets team in 2007. FCA accused the bank of being aware of Scourfield’s sanctioning lending beyond his authority, yet it did not share the information with the regulator till July 2009.
“There is also no evidence anyone realised or even thought about, the consequences of not informing the authorities, including how that might delay proper scrutiny of the misconduct and prejudice the interests of justice,” the FCA said in a statement.
“There was insufficient challenge, scrutiny or inquiry across the organization and from top to bottom,” it said.
Two years ago, in February 2017, Scourfield was sentenced to 11 years of imprisonment. Besides, five other people were also penalised for misusing the funds. Consultant David Mills was jailed for 15 years; Michael Bancroft was jailed for 10 years; Mark Dobson, another former HBOS manager, was sentenced to four and a half years. Alison Mills and John Cartwright were given three and a half year sentences for committing the crime of money laundering.
Scourfield, Dobson, Alison and David Mills have also been barred from working in financial services.
The criminal investigation conducted by Thames Valley Police revealed that the six individuals issued loans to siphon the funds and spent the profits on prostitutes, luxury holidays and a range of expensive products.
At the time of the fraud, Bank of Scotland was part of the Halifax Bank of Scotland (HBOS), which got taken over by the Lloyds Banking Group in 2009.