Novel use of the unlawful means tort against claims management companies upheld

In a case likely to be of considerable interest to the banking industry, the High Court has dismissed a claims management company’s attempt to have the claim against it struck out.

In recent years, the conduct of claims management companies involved in high-volume financial service claims has been a matter of concern to the banking industry and has been the subject of comment and guidance both by the FCA and the SRA.

From late 2023 onwards, one such company regulated by the SRA, The Money Solicitor (TMS), referred thousands of financial mis-selling complaints to the Financial Ombudsman Service (FOS) on behalf of existing or former customers of Vanquis Bank, alleging that Vanquis had acted irresponsibly by advancing customers credit which was unaffordable for them.

As at 31 August 2024, TMS had submitted 33,000 complaints to Vanquis of which around 17,500 had then been referred to the FOS.

TMS submitted the claims on a ‘no win no fee’ basis and so would not be paid for its work unless the complaints succeeded.  However, the vast majority of the complaints were not upheld and Vanquis contends that most of the complaints were not properly arguable in the first place. 

Nevertheless, Vanquis was still forced to incur significant sums investigating and responding to the individual complaints and was also required to pay a referral fee of either £600 or £750 in respect of every complaint referred to the FOS, regardless of the outcome. 

In March 2024, Vanquis issued proceedings against TMS in the High Court seeking damages and injunctive relief relying on the economic tort of causing loss by unlawful means.  Vanquis alleged that TMS had failed to carry out proper due diligence in relation to the complaints and, in particular, had not ascertained whether the claims were properly arguable before they were submitted.

Vanquis alleged that TMS intended to cause it loss by unlawful means, the unlawful means being various breaches of duty owed by TMS to its clients and/or as a result of express or implied representations made by TMS to its clients to the effect that their claims were properly arguable.  Vanquis alleged that those merits representation were false and made recklessly on the basis that TMS did not know or care whether they were true.

As a result of those unlawful means, Vanquis alleged that TMS had interfered with the freedom of clients to deal with Vanquis and that TMS intended to cause loss to Vanquis (the loss to Vanquis being the means by which TMS enriched itself by earning fees in respect of the small number of complaints which happened to succeed).

This was a novel use of the unlawful means tort as this economic tort is more commonly used in cases involving unfair business competition and in the employment context.

TMS applied to strike out the claim arguing that, even if the facts alleged against it were true, the claim against it was unprincipled and bound to fail as a matter of law. TMS’s position was that the tort of causing loss by unlawful means has no role to play in this type of situation and that if Vanquis had any complaints about its conduct, then the appropriate course was to complain to the SRA or the FCA.

TMS relied on a number of different arguments, including that the requirement of ‘interference’ (which is one of the essential ingredients of the unlawful means tort) was not satisfied since TMS’s conduct did not, TMS alleged, interfere with its clients’ freedom to do business with Vanquis.  TMS also argued that there was no basis for inferring that TMS intended to cause loss to Vanquis because TMS’s intention was to submit meritorious claims, not to submit unmeritorious claims.  TMS also argued that, even if the entire claim should not be struck out, a number of the heads of loss claimed by Vanquis were irrecoverable as a matter of law. 

For the reasons set out in his judgment handed down on 25 June 2025, Mr Justice Jay rejected all of TMS’ arguments.  The judge accepted that the facts of the case were novel and that the tort of unlawful means had never been used in an equivalent situation.  However, he held that TMS’s conduct, if established at trial, would be egregious and that there was no reason in principle why the tort of causing loss by unlawful means could not be relied on by Vanquis in such a situation.

He therefore dismissed TMS’s application to strike out the claim and the matter will now proceed to trial.

Edward Levey KC and Gillian Hughes instructed by Herbert Smith Freehills Kramer acted for Vanquis Bank.

A copy of the judgment is available here.