POLICE Scotland have been asked by MPs to investigate individuals implicated in a £245 million fraud at HBOS Reading that destroyed scores of small businesses.

The call has come from the All-Party Parliamentary Group (APPG) on Fair Business Banking, which said the media has fixated on the lessons that may – or may not – have been learned by the financial industry in the decade since the financial crash.

However, MPs said that for many small businesses, and constituents who made representations to them, no lessons can be learned if the “financial fraud that has been alleged in the intervening years is not thoroughly investigated”.

The APPG has now made official contact with Police Scotland, urging them to carry out a further investigation of the HBOS fraud – which members said was a criminal matter they believed extended to a higher level than those already convicted and which was centred in Edinburgh.

Earlier this year, Scottish businessman Neil Mitchell – a frequent critic of Britain’s big banks – made public a leaked copy of the Turnbull Report into the fraud, which he described as his “gift to all victims of bank crimes and their families”.

He said at the time that HBOS executives knew about the fraud as early as 2004 but failed to properly disclose it. This, he said, had far-reaching implications given Lloyds’ takeover of HBOS in 2009.

The APPG said the Turnbull Report clearly demonstrated that the boards of both HBOS and then Lloyds Banking Group (LBG) in Edinburgh knew about the HBOS Reading fraud from an early stage.

If dealt with appropriately at the time, years of suffering for hundreds of individuals could have been prevented, MPs believe.

Instead, both institutions concealed the fraud and went after the victims for their remaining assets.

APPG co-chair Kevin Hollinrake said: “They not only failed to act on the evidence of serious criminal fraud but fired the whistleblower who had revealed the extent of the criminal activities. In an act of calculated naivety, they believed that the fraud will simply go away.”

He praised the “extraordinary efforts” of the “victims of injustice”.

The APPG said it was calling on Police Scotland to investigate the HBOS Reading fraud with “a much wider scope” to consider exactly how deep the fraud went within HBOS and to ensure that those who responsible for the serious allegations of financial fraud were held accountable.

Mitchell previously said the report exposed “criminal misconduct” by Lloyds and HBOS managers and a cover-up by executives.

He said people wanted to see “political movement” towards changing the “toxic, exploitative, greedy cultures” of the banks with political, regulatory or legal actions.

Mitchell said: “As the Scottish businessman who acquired and leaked the withheld FCA report on RBS Global Restructuring Group, leaked the Turnbull Report that had been kept secret by government agencies for five years and this week leaked the details of the Police Scotland investigation into bribery and corruption at RBS.

“I wholeheartedly support this call by the APPG for Police Scotland to investigate individuals at the highest level in relation to the Lloyds HBOS frauds.”

A spokesperson for Lloyds Banking Group said: “We would always fully assist with any such inquiry were one to be launched.”