Background to the claim

Vanquis specialises in “second chance” lending to individuals who may not be able to secure lending from a mainstream credit provider. TMS specialise in managing financial mis-selling claims on behalf of their clients. They operate on a “no win no fee” basis, charging their clients substantial amounts of any sums recovered. 

Vanquis allege to have received approximately 33,000 “irresponsible lending” complaints from TMS between October 2022 and August 2024. In outline, TMS argue on behalf of their clients that Vanquis had provided unaffordable lending to their clients, contrary to various regulatory obligations. TMS assert that Vanquis failed to carry out affordability checks before approving lending applications. 

Of the complaints submitted, the vast majority were either withdrawn by TMS, rejected for being out of time, or rejected on the merits. Only c.7.8% were upheld by Vanquis. Where customers were not satisfied with the outcome, they were able to refer to FOS (which TMS would manage). Again, the majority were with withdrawn or rejected by the FOS. 

Vanquis contends that TMS, in submitting the complaints on behalf of its clients, had acted in beach of its duties to its clients. A key criticism of TMS is that TMS failed to carry out proper due diligence on the alleged complaints and/or merits of the complaints. It was alleged that the majority of the complaints submitted were generated by use of an online questionnaire to clients, but these questionnaires omitted key details to enable TMS to analyse the merits of the alleged complaint. It was Vanquis’ case that the majority of the complaints should not have been brought. Vanquis allege that as a result of this conduct, it has cost them significant sums in employing extra staff, wasted management time, FOS referral fees and lost profits. They claim in excess of £12m from TMS. 

TMS argued that the claim as pleaded disclosed no reasonable grounds for bringing the claim and/or that the claim has no real prospect of succeeding. The court said that the main issue for determination was whether the facts of the case can be accommodated within the proper bounds of the tort of causing loss by unlawful means. 

The decision

TMS’ application was dismissed. Vanquis’ claim will continue to trial. In making this decision, Mr Justice Kay accepted that “the facts of this case are novel but I cannot accept that their legal viability depends on an extension of existing principles” and “the reason why this sort of claim has not been brought in the past is that … it can only stand a chance of succeeding on egregious facts. If Vanquis …is right this would be an example of egregious conduct by TMS.”

In relation to the legal test for the tort, the Judge found that it has four key elements and in applying this test, he concluded that:

• Unlawful acts used against and actionable by a third party: a breach of contract (between TMS and their clients), fiduciary duties and regulatory obligations could constitute "unlawful means" for the purposes of the tort. 
• Interference with the actions of the third party: it was arguable that TMS' actions could amount to interference both generally and specifically with Vanquis’ relationships with its customers. 
• Intention to cause loss: Whilst it was accepted TMS' primary purpose was to benefit itself financially, it was arguable TMS knew its actions would cause economic loss to Vanquis
• Loss in fact caused to the claimant: Vanquis' pleaded losses may well have been caused by TMS' alleged unlawful acts. 

Comment

This decision marks a positive step forward in challenging CMC culture and will welcomed by financial institutions. It may encourage others to submit claims where facts are similar.

It should however be remembered that this is judgment following an interim application and not a judgment following trial. Vanquis will be required to prove its case at trial and the Judge was careful to say that he was “not expressing any view as to whether Vanquis’ case is right” at this stage.

The judgment comes at a time where the conduct of CMCs is being scrutinised more closely. There is more calling out of unacceptable conduct in the press and the SRA published guidance CMC activity in May 2024. There has also been the introduction of FOS fees for professional representatives in April 2025. The hope is, that with all of this, it will pave the way for better standards in this space.