Source · Select Committees · Business and Trade Committee
Recommendation 10
10
Paragraph: 35
In responding to this report, we expect the Government to explain how the Historic Shortfall...
Conclusion
In responding to this report, we expect the Government to explain how the Historic Shortfall Scheme differs from the HBOS Reading scheme and what safeguards have been built in to avoid the problems that the latter scheme experienced.
Paragraph Reference:
35
Government Response
Not Addressed
HM Government
Not Addressed
The Government is aware that Herbert Smith Freehills was employed by Lloyds Banking Group to provide legal support in relation to the HBOS Reading compensation process. We are also aware that the All-Party Parliamentary Group on Fair Business Banking submitted a complaint to the Solicitors Regulatory Authority (SRA) in July 2020, relating to Herbert Smith Freehills’ involvement in the HBOS Reading Scheme. The SRA confirmed following that investigation that “they looked at all the available information and decided to close the matter with no further action”.5 The Historical Shortfall Scheme differs from the HBOS Reading Scheme in some important areas: i) Whereas in the HBOS Reading Scheme it has been reported that claimants found it difficult to claim consequential losses, in the Historical Shortfall Scheme claims for consequential losses6 are clearly in scope.7 ii) Whereas there was some reported criticism that the HBOS Scheme set a high evidential standard for claims for direct and consequential losses, the Historical Shortfall Scheme seeks to account for evidential issues when assessing all types of claims, including for direct and consequential loss. This approach is explained in the Historical Shortfall Scheme guidelines, which explain that “where the postmaster is unable to satisfy the burden of proof in relation to their claim, their claim may nonetheless be accepted in whole or in part if the Scheme considers it to be fair in all the circumstances”.8 Further detail can be found in the response under Recommendation 15 below. iii) Whereas it has been reported that in the HBOS Reading Scheme there was no opportunity to appeal an offer (or no offer),9 the Historical Shortfall Scheme offers claimants opportunities to meet with the Post Office to discuss any concerns with their offer as part of the Dispute Resolution Procedure and refer the matter to another form of Alternative Dispute Resolution. This includes the option of mediation with an independent mediator. More detail about the Dispute Resolution Procedure can be found below in the response to Recommendation 8. iv) The HBOS Reading Scheme is reported to have used a panel made up of senior Lloyds Bank personnel,10 whereas the Historical Shortfall Scheme has put in place an independent advisory panel of legal, forensic accounting and retail specialists to make recommendations on claims.