This is a story about criminal behaviour at one of Britain’s oldest and most famous banking institutions. It involves Mr Blobby and a radio DJ called Noel Edmonds. It also involves Lloyds bank, which as their current TV commercials will tell you, has been stealing looking after your money since 1765, when it was known as Taylor & Lloyds. Sampson Lloyd was a Birmingham Quaker. How he will be spinning now. This story shows that the banks were stealing from each other (dodgy mortgage products), stealing from you (PPI) and stealing from small businesses. Thanks to Noel Edmonds, the tide has now turned against the banks for good. Hooray!
To understand how this story is escalating, we need to take a few steps back down memory lane to the latest (but not the last) banking crisis in 2008. Back then, even by today’s standards, banking in the UK was modelled on the Wild West. Not content with packaging up rotten mortgages, badging them as ‘A grade’ loans, selling them on and heading for the hills, the banks sold you insurance you did not need. This was more serious because it didn’t just affect institutions. It affected Joe Public, and boy did it. The insurance, known as PPI, was not only pointless but it was rammed down the throats of people who did not understand that it was optional. Compensation for PPI is running at £40 billion. Yes, billion. And yes, that is $50 bn.
This story has got not very much to do with any of that.
It focuses instead on one bank, in one part of England: Reading. HBOS, which is now Lloyds. After HBOS crashed, and then Prime Minister Gordon Brown bumped into the Chairman of Lloyds at a canapé reception, Lloyds bought the failing bank. It was a disaster for him, Victor Blank, and a disaster for Lloyds. It also marked the start of a difficult time for Radio 1 DJ and TV personality Noel Edmonds.
As for all retired Radio 1 DJs, Noel has become easy to mock. After radio, he had a massive Saturday night hit on BBC TV which had various names, including the Late Late Breakfast Show (it was on in the evening), but was most famous as Noel’s House Party. This was before Deal or No Deal, but all of these shows were massive hits. They made Noel a national treasure, especially for his comic creation Mr Blobby.
For a while, Blobby was bigger than Edmonds. He even had his own Theme Park.
The scandal relates to the timeframe 2003 to 2007, which led right up to the start of the financial crisis. The corrupt bankers have only just been jailed for a loan scam totalling £245 million. This has opened the floodgates for the businesses affected to come forwards for compensation. Inexplicably, having noted the £245 million figure, the pot set aside by Lloyds is only £100 million. Or a third of the money Noel Edmonds’ team believes he alone lost. Quite how the £100 million was calculated is a mystery known only to Lloyds. It is most likely going to rise, just as their PPI estimate rose another £700 million earlier this week.
Looking in more detail at the numbers, we discover that the £100 million loan compensation for destroyed businesses is for the first quarter only. So that helps to explain things: the claims will most likely be settled in batches. Lloyds has not announced their estimate for the total compensation bill, but they have set aside £1 billion for PPI and £300 million for mortgage fraud this year alone. So the business loans amount is likely to be between these two figures, as there will be fewer claims but each claim will be larger.
The criminals, all staff in Reading, number six in total and have unsurprisingly become known as the Reading Six. Evidence seen during the trial shows that these were not six bad apples. The entire culture in Reading stank. There are allegations that Lloyds failed to cooperate fully with the police, and Edmonds’ team claims that the crimes were on an ‘industrial scale’. Well they had to be, this being the business banking department.
Thirty business customers have either settled or will shortly be made offers of compensation. Lloyds have not disclosed how many have actually settled (so it could be as few as one) compared to those they have simply made offers to which have not yet been accepted. Not so Noel Edmonds, who has used his popular talents to good effect over on YouTube. Edmonds suggests 60 businesses in total were affected, but they will vary in size. If 30 have settled, you might think the job is 50% done. Not so.
Edmonds is further angered that the media, when reporting the Lloyds trial, would often suggest that the 60 businesses were in trouble anyway. Lloyds simply hastened an inevitable demise. Again, not true. And even if they were in trouble, what Lloyds did to them was still criminal.
What Noel Edmonds has now done is perfect for our social media age. He is a gifted communicator and household name. Nobody at Lloyds, or indeed any other bank, has quite his level of charisma. Even the famously charming Fred Goodwin of RBS couldn’t hold a candle to Noel. (Enough jokes. Ed.)
Noel’s YouTube career is doing just as well as Deal or No Deal. His clips have tens of thousands of hits. But although he is visibly angry in some of the presentations, he sticks remarkably well to facts and to rational argument. He’s not some foaming at the mouth rabidly bitter businessman at all. A slick, charming, and above all convincing presenter.
We wish Noel all the best, and the other 59 business leaders who were screwed. The more heat he can put on Lloyds, the less likely any banker will be to try this in the future. And we all know that RBS GRG (their Global Restructuring Group) was even worse.