Lloyds Banking Group LIBOR Rigging Fine

Meet the team:

Share this post: linkedin Twitter facebookshare Email
Posted in:Banking and Finance|August 4, 2014 | Join the mailing list

The FCA and the US Regulator, the US Commodities Future Trading Commission, have fined Lloyds Banking Group £105 million and $105 million respectively.  Lloyds was fined by the EU in 2013 for LIBOR rigging in a Cartel also, which brings the total fines for
LIBOR to £218 million.

The Lloyds’ fine is remarkable for two reasons.

1.    Lloyds has directly been fined for manipulating Sterling LIBOR.  Barclays had been found to have done it but was not fined for rigging sterling LIBOR and no other bank has been found to have rigged sterling LIBOR.  That means that any
party with a Lloyds’ agreement that is subject to LIBOR for the relevant period that the rigging took place should consider the taking of legal advice now because the LIBOR issues could have far reaching implications if the agreement with the bank is still
a live agreement.

2.    Lloyds was found to have manipulated the Special Liquidity Scheme via the Repo Rate.  This was set up by the Government to help banks during the banking crisis, lending approximately £185 billion to the Banks in return for hard to sell
stock owned by Banks.  The Banks paid a fee to the Government based upon the Repo Rate.  Lloyds has been found to have manipulated this rate in order to pay less to the Government than it would otherwise have done.  It is remarkable because Lloyds had taken
a significant bailout from the Government and then additionally received more taxpayers’ money under the terms of the Special Liquidity Scheme but then took part in a scheme to withhold fees due to the Government.  Commentators are especially appalled by this

What does this mean?

Lloyds has been found to have undertaken some very serious things that has had direct effects upon its customers, to whom Lloyds owed a duty to act in good faith, and had a direct impact upon fees it paid to the Government during the period that the Government
was attempting to stop HBOS, Lloyds and RBS (and other banks) from collapsing.  

In addition to the issues relating to Lloyds selling products to customers, such as IRHPs, its £10 billion PPI bill and the various other legacy issues Lloyds faces, this new fine is not the end.  It is highly likely that customers that entered into loans and
IRHPs with Lloyds during the relevant periods are going to seek legal advice and consider whether suing Lloyds is appropriate.  Berg’s Banking & Financial Litigation Team are well prepared for this.

Lloyds’ recent evidence to the Treasury Select Committee is also illuminating.
This transcript can be found here

Lloyds had been accused of sending out “fake” solicitors’ letters from a law firm that transpired to be Lloyds itself.  The Chairman of the Committee, Andrew Tyrie, asked Tim Hinton, Managing Director, SME & Mid Markets Banking, Commercial Banking, Lloyds Bank
if he thought that customers receiving this letter would believe that Lloyds had instructed an external law firm.  We believe that Lloyds’ answer reveals an arrogance or at best a blind ignorance of the obvious impropriety of their conduct.  They relevant
exerts are as follows:

Q. 790 [The Solicitors’ Letter] begins, “We act for Lloyds Bank”. If you received a letter like that, if it was headed “SCM Solicitors”, would you conclude that it was from Lloyds Bank or from someone else?
Tim Hinton: I think it could be either.
Q 791 I am asking you whether, if you received that through the post, you would conclude that that was from Lloyds, or from a firm of solicitors that act independently of Lloyds.
Tim Hinton: I would certainly think they were working in tandem on behalf of the bank.
Q792   Chair: I will have one more go asking this fairly straightforward question—I think you would agree it is a straightforward question. When you get a letter from someone who you are buying a home from, you know that it is from them, and when you get one
from their solicitors, it normally begins, “We act for Mr Jones, whose house we are selling to you.” Is that not correct? Therefore, is not the language, “We act for Lloyds Bank”, extremely misleading?
Tim Hinton: I do not see it as misleading, no, but I guess you could argue it is. I would take “We are solicitors for Lloyds Bank” on that merit, and that you are a qualified solicitor working in tandem with the bank.

Mr Hinton simply cannot answer the Chairman with a straight answer.  If an ordinary person receives a letter such as the ones being sent by Lloyds they will believe that Lloyds has passed the matter to an external solicitor.  The fact that Mr Hinton believes
such customers would not think this but would instead think Lloyds is “working in tandem” with a solicitor who may or may not be external Is breath-taking.

It hasn’t been a good year for Lloyds considering that the Government is slowly selling its stake in the Bank.  Do keep reading this website, as we regularly update it with news relating to a whole range of Banking, Financial and related areas of litigation.

For more information about any of the above or for practical advice on this or any other aspect of banking and financial disputes, please contact
Kalvin Chapman of the Berg Banking Litigation Team on 0161 833 9211 or email him at

(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.) 

Join our mailing list

More from berg



The ‘energetic’ and ‘efficient’ team at berg includes team head Damian Carter, who is ‘a good tactician and goes the extra mile for his clients'.

Legal 500 2016, Dispute resolution – Commercial litigation