Vanquis Bank: Questions over checks it conducted
A law firm that specialises in financial mis-selling is facing a novel claim of causing loss by unlawful means through deluging a bank with allegedly poor-quality cases.
Mr Justice Jay yesterday rejected Bournemouth firm TMS Legal’s application to strike out Vanquis Bank’s claim form, particulars of claim and proposed amended particulars.
He held that, although this was a new application of the tort of causing loss by unlawful means, it was founded within its established principles and did not seek to extend them.
“The reason why this sort of claim has not been brought in the past is that for various reasons it can only stand a chance of succeeding on egregious facts,” the judge said.
“If Vanquis’s case is right, this would be an example of egregious conduct by TMS. As I sought to explain to TMS at the end of the hearing, I am not to be understood as expressing any view as to whether Vanquis’s case is right. I simply do not know, and I have only heard one side of the story.”
Vanquis contends that, as a result of receiving about 33,000 claims from TMS between October 2022 and August 2024, it had to spend £2.8m on additional temporary members of staff, wasted management time – put at approximately £930,000 a year – had to pay over £9m in fees to the Financial Ombudsman Service (FOS) and has lost profits of at least £270,000.
According to its figures, Vanquis fully or partially accepted around 14% of the complaints from TMS, while the FOS upheld 10% of the cases referred to it.
Jay J explained that Vanquis specialised in so-called ‘second chance’ lending to people with poor credit histories, while TMS specialised in claims for irresponsible lending. It has only one qualified solicitor overseeing the claims.
“In outline, TMS alleges that Vanquis provided unaffordable credit to its clients, violating various regulatory obligations. The irresponsible lending claims are based on the assertion that Vanquis failed to conduct adequate affordability checks before issuing credit cards or increasing credit card limits.”
TMS charged it charged its clients up to 45% of any redress obtained under a conditional fee agreement (CFA), reduced to 30% after July 2024 due to the cap imposed by the Solicitors Regulation Authority.
“These charges apply even if the redress is in the form of a write-off of debt,” the judge observed.
Jay J summarised Vanquis’s claim as being that it has been “inundated with claims which were submitted recklessly and indiscriminately and in breach of TMS’s duties to its clients”. The majority of the claims, it argued, should never have been brought for a variety of reasons.
The minority of claims that succeeded did so only through the work of Vanquis itself or the FOS, it submits.
TMS’s business model works, it argues, if only a relatively small proportion of the claims succeed with minimal effort put in.
Intention to cause loss by the use of unlawful means is one of the elements of the tort and Jay J said he could not accept the contention that TMS’s intention would be attributed to any solicitor or barrister operating on a CFA.
“That was not my experience when working for claimants on a CFA, even in one case where there were 30,000 clients. Indeed, my solicitors and I proceeded on the basis that there was a duty to ensure that each individual claim was reasonably arguable.”
In a statement, TMS said: “The court’s ruling relates solely to an application for summary judgment and does not validate Vanquis’s allegations or reflect any findings on the merits.
“The judge was at pains to point out that he was not expressing any view as to whether Vanquis’ claims are right.
“TMS continues to firmly deny Vanquis’s unproven accusations and they will be fully addressed at trial. TMS maintains its conduct was and is fully compliant with all professional and regulatory duties and looks forward to presenting its case in full.”
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