The latest compliance issues in wealth management across the UK, Europe, the Middle East and Africa.

Lloyds Banking Group
An internal Lloyds Banking Group report, written by a former manager at the bank, alleges misconduct over the handling and disclosure of fraud at its HBOS Reading operation, media reports have said.

The report, written in 2013 after the Lloyds manager had taken her concerns to the police, alleges that HBOS executives knew about the fraud as early as 2004, and failed to properly disclose it. It also states that Lloyds mishandled its investigation and disclosure of the fraud following the takeover of HBOS in 2009.

According to Reuters, the report has been circulated privately among regulators and law enforcement officials for years, but has not been made available to the public.

A spokesperson for Lloyds Banking Group said: “This report was provided to the FCA and the police at the time, in 2014.The work was initiated by our employee at the time on her own initiative. As soon as it came to Lloyds’ knowledge, the then head of group audit asked the employee to set out what she had found. It was then provided to the FCA and the police. The FCA is currently investigating the extent and nature of the knowledge of the discovery of misconduct within HBOS's impaired assets office in Reading and HBOS’s communications with the regulator after the initial discovery of the misconduct."

"We have also provided this report to Dame Linda Dobbs, whose separate and independent review will consider whether the issues relating to HBOS's impaired assets office in Reading were investigated and appropriately reported to the authorities at the time by Lloyds Banking Group, following its acquisition of HBOS in 2009,” the spokesperson added.

Six people, including two former HBOS bankers, were jailed last year for a combined 47 years for their role in the fraud.

According to the newswire, the report says that if HBOS had properly disclosed the fraud in its 2007 annual report, the £4 billion ($5.3 billion) 2008 rights issue that stabilised its precarious financial position, and its subsequent takeover by Lloyds, would not have happened.