Claims management law firm loses strike out application

Vanquis Bank Limited brought a case against TMS Legal Limited for causing loss by unlawful means. TMS Legal Limited is a “no win no fee” claims manager which has helped many complainants make a complaint to Vanquis Bank about irresponsible lending. Vanquis’ business is “second chance” lending to individuals with poor credit histories. TMS alleged that Vanquis provided unaffordable credit to its clients in breach of various regulatory obligations.

Vanquis said that TMS is responsible for inundating it with claims which were submitted recklessly and indiscriminately and in breach of its duties to clients. Not least many of the claims should not have been brought because they were not properly arguable, were brought without customer authority, did not provide information that enabled Vanquis to identify the customer or were advanced without warning the customer that credit cards were likely to be suspended. It said that TMS knew most of the claims would fail and so it is to be inferred that, at least in part, TMS wanted to cause loss or damage to Vanquis. Vanquis has had to engage additional temporary staff to deal with the claims, has had to pay significant fees to the FOS, has wasted management time and has lost profits. Ultimately, of the roughly 33,000 claims submitted, TMS withdrew around 2,600. Of the test, 41.1% were rejected as being out of time, 35.8% rejected on the merits, 7.8% were partially or fully upheld and the remaining 15.3% were referred by TMS to the FOS before Vanquis had determined them. Less than 10% of complaints that went to the FOS were upheld by it, and where complaints were upheld this was never on the basis of information provided by TMS.

This was not a full hearing of the case, but a hearing of an application by TMS to strike out Vanquis’ case. The judge considered each of the four elements of the tort Vanquis alleged (unlawful acts, interference with the actions of a third party, intention and causation) and, in each case, rejected or saw no merit in TMS’ submissions, and therefore dismissed both TMS’ application to strike out the amended Particulars of Claim and its application for summary judgment.

The judge stressed that the decision was not to be understood as expressing any view as to whether Vanquis’ case is right, but that it should be considered at trial – and that the claim would only succeed if TMS’ conduct had indeed been egrarious.