Lloyds Bank Accused of Failing Small Firms
Lloyds Bank business customers and whistle blowers have accused it of failing small firms as it tried to reduce lending after the financial crash of 2008. Business owners who borrowed from Lloyds around that time have told the BBC their firms collapsed after the bank introduced them to its Business Support Unit (BSU), intended for clients it considered were struggling.
A whistleblower told Panorama there was a “pattern” of “pigeonholing” small businesses as “distressed” when they were “salvageable”.
Lloyds said it “categorically denied” the allegations and its BSU “supported many thousands of customers”.
During the banking crisis of 2008, the government bailed out banks to save them from collapse, including Lloyds which got £20bn of taxpayers’ cash.
Then Prime Minister Gordon Brown said as a condition of the bailout banks must protect lending to small and medium sized businesses. But over 15 years, the BBC has heard allegations that Lloyds’ BSU failed small firms.
James Ducker, who sold financial products to businesses for Lloyds in 2009, said “the approach to lending became do not lend. Beyond that, get as much money back that we’ve lent as possible.” He said customers in the BSU were “easy pickings”.
A whistleblower who worked for a consultancy firm brought in by Lloyds to advise small businesses in the BSU told BBC Panorama that in their experience the companies described by the bank as distressed “probably weren’t distressed, they were salvageable. I believe there was a pattern. There’s no other way to put it.”
Wishing to remain anonymous, the whistleblower accused the bank of “planning the administration of these entities in advance of reports that were produced. The business plan was completely ignored. They weren’t interested in saving the company.”
Lloyds said: “These historic allegations have been thoroughly investigated by the group and found to be unsubstantiated. They are categorically denied.”
Lloyds said Martin’s rate rises were “in accordance with the terms” of his agreements and it doesn’t accept they “ultimately distressed” his business “or “led to its collapse.”
By 2016, and with base rates still below 1%, Lloyds called in Martin’s debts.
His business went under, and the bank is still seeking repossession of his home, something Martin is fighting in court. He said the impact of securing the borrowing against his home wasn’t properly explained to him.
Lloyds said “repossession is always a last resort” but it is “required in the interests of depositors and shareholders to protect its security when loans are defaulted upon”. It said numerous inquiries into Martin’s case have found “no evidence of wrongdoing”.
