Britain’s Lloyds racks up $350m in probable fraudulent COVID loans

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By Lawrence White and Iain Withers

LONDON (Reuters) – Lloyds Banking Group has been hit by more than 300 million pounds ($348 million) in suspected fraud related to COVID-19 pandemic-era stimulus loans for small businesses, the most high among major banks, according to government data.

Overall, UK banks have labeled some £1.1bn of the emergency loan scheme known as ‘bounce back’ loans as fraud, according to data released by the UK’s Department for Business, Finance on Monday. Energy and Industry (BEIS).

Lloyds is the worst hit among the big banks in terms of net amount and has also recorded a higher likely fraud rate with some 3.6% of its £8.5bn bounced loans classified as suspect, according to a calculation by Reuters from the data.

This compares to 2.4% for Barclays’ £10.8bn loan under the scheme, 1.7% for NatWest’s £8.9bn and 1.3% for NatWest’s £7.3bn. HSBC.

A Lloyds spokesperson said its suspected fraud rate was lower than the 7.5% average estimated by scheme administrator British Business Bank.

“When fraud was identified, we acted quickly and have already recovered the majority of these funds without calling the guarantee and will continue to attempt to do so even after a claim is filed,” the doorstep added. -word.

The other banks said the different levels could partly reflect some lenders having more sophisticated fraud detection measures, as well as different thresholds for classifying a loan as suspicious.

Levels of fraudulent loans with lenders are not final and are subject to change. Under the rules of the scheme, the government is liable for the costs of fraud if the banks can prove that they administered the scheme correctly.

“These programs have been implemented with unprecedented speed to protect millions of jobs and businesses. If the government did not act quickly, more businesses would have gone bankrupt and many more jobs would have been lost” , said a government spokesman.

Smaller online lenders have been disproportionately hit by suspicions of fraud, with two classifying up to around one in four of their bounced loans as potential scams.

London-based New Wave Capital Limited – which does business as Capital On Tap – and Isle of Man-based Conister Bank reported 27% and 24% of their loans as suspected fraud respectively, according to the Reuters calculations based on government data.

New Wave Capital and Conister did not respond to an emailed request for comment.

The latest data on overall levels of fraud, first reported by Reuters on Friday, hints at a potential headache for Britain’s ruling Conservative Party and bank bosses over how the loan scheme emergency was rushed in 2020.

A junior government minister, Theodore Agnew, resigned in protest at the running of the scheme in January, saying efforts to end fraudulent loan abuse were “dismal”.

The British Business Bank said proper fraud checks had been in place from the start, and lenders administering the scheme said overall fraud levels were low.

(Reporting by Lawrence White, Iain Withers and Sinead Cruise, Editing by Ed Osmond and Louise Heavens)

Copyright 2022 Thomson Reuters.

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