Lloyds Bank refuses to compensate victims of alleged £160m Ponzi scheme: 'Can't consider it a scam!'

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The banking group maintains that the alleged £160million Godwin Capital Ponzi scheme is considered a "legitimate" investment

Lloyds Banking Group is refusing to compensate those who lost money in the alleged £160million Godwin Capital Ponzi scheme, maintaining that it constituted a "legitimate" investment.

The banking giant informed one affected investor that it "can't consider this was a scam," despite insolvency practitioners characterising the operation as a Ponzi scheme.

This is the term used to describe where funds from new participants are used to meet obligations to earlier investors rather than being deployed in genuine commercial activity.

The banking group's stance comes even as insolvency practitioners have launched legal proceedings against Godwin Capital's directors, alleging mismanagement, fraudulent trading and breach of fiduciary duty.

The directors, who have not publicly responded to the allegations, have seen their assets frozen as part of a £155million claim brought against them.

Godwin Capital operated as a "loan notes" investment business before its collapse in 2025, leaving thousands of investors facing devastating losses.

Those who put money into the scheme are now expected to recoup just 5p for every pound they invested. Their assets have been subject to a freezing order as the case proceeds through the courts.

None of the directors have made any public comment regarding the accusations levelled against them, which include mismanagement, fraudulent trading and breach of their fiduciary duties.

Lloyds served as the receiving bank for the £160million raised from investors, a relationship that promoters allegedly exploited to give the impression that funds were secure.

It is understood that at times promoters used inaccurate details about the banking arrangement to reassure potential victims.

Approximately £35million of investor money is understood to have been channelled to third-party promoters who marketed the scheme, with many of these payments believed to constitute undisclosed commission.

These promoters enticed investors with lavish "incentives," including a four-day supercar tour through the Tuscan countryside in Italy.

Rules designed to shield consumers from authorised push payment fraud came into force in October 2024, mandating that banks reimburse customers who transferred funds on or after October 7 that year.

A separate "contingency" framework covers earlier transactions — and it is this mechanism at the heart of the current disagreement between victims and Lloyds.

Speaking to The Times, a Lloyds Banking Group spokesperson said: "We haven't reviewers the payments under this code, as it doesn't apply to legitimate investments. Based on the information you've provided, the payments you made were investments in a legitimate company."

Lloyds added that there "isn't any evidence currently available" demonstrating the money was "not really invested as intended".

They added: "Protecting our customers is our top priority, and we take our financial crime responsibilities very seriously, investing significantly in prevention and detection to help identify suspicious activity."