Banking group HBOS has hit back at claims that The Accident Group's (TAG) demise was fuelled by its refusal to lend the claims firm more funds.
Yesterday HBOS said any money it lent to TAG was not intended to pay wages - raising concerns about the way in which the company's finances were run.
HBOS, which was not TAG's banker, claims it lent money to TAG to underwrite the legal cost of bringing claims to court. HBOS is believed to have pulled out of its deal with TAG after accessing the company's accounts, which it is believed showed TAG's perilous position.
However, TAG founder Mark Langford, claimed he had been unable to pay staff wages on Friday because HBOS had not lent the company £4.5m. As a result the group was forced into administration.
HBOS' claims are set to increase pressure for the government to launch an inquiry into the company's finances.
According to reports, a TAG source said yesterday that the group had been "losing money hand-over-fist" as the number of bogus claims it had attracted forced insurance premiums up.
