Lender’s claim against volume claims firm for causing loss by unlawful means is viable Vanquis Bank Ltd v TMS Legal Ltd

Vanquis Bank (“Vanquis”) sued TMS Legal (“TMS”), a law firm, claiming TMS caused Vanquis significant financial loss by submitting large numbers of unmeritorious, affordability complaints. The claim sought to use the tort of causing loss by unlawful means in this novel context. TMS applied to strike out the claim and/or for reverse summary judgment arguing that the tort could not be used in this way.

In a judgment handed down on 25 June 2025, the High Court concluded that Vanquis’s claim against TMS can continue and be tested at trial. TMS’s application for strike out and/or reverse summary judgment was dismissed.

The financial industry has complained about claims management companies (“CMCs”) and law firms submitting volumes of unmeritorious complaints for years. This is the first time where the tort of causing loss by unlawful means has been tested in court in this context. It likely means that more lenders may now be tempted to bring claims against CMCs and law firms, who submit volumes of complaints without proper care or due diligence. The judgment could have significant implications for the volume claims management market, whether CMCs or law firms, and no doubt the FCA and the SRA, their respective regulators, will be taking note.

Background

• Vanquis specialises in lending to individuals underserved by mainstream credit providers. TMS is a law firm practising in financial mis-selling complaints. TMS operates on a no-win, no-fee basis and has historically charged clients up to 45% of any redress (subsequently capped at 30% following the introduction of the SRA cap on such claims)
• In October 2022, Vanquis began to receive complaints from TMS which made allegations of irresponsible lending on behalf of Vanquis customers. Those complaints alleged that Vanquis failed to conduct adequate affordability checks before issuing or increasing credit limits
• Importantly, and in accordance with industry standards, Vanquis will suspend any further credit upon receipt of such a complaint given what is alleged
• Vanquis noted that TMS complaints numbers increased substantially from January 2023 onwards, such that, by 31 August 2024, it had been inundated with 33,000
• Vanquis’s analysis demonstrates that the success rate of TMS complaints was low, with less than 8% upheld by Vanquis. Of the numbers escalated to the Financial Ombudsman Service (“FOS”) (c.15% of the complaints pool), only 16% were said to be successful. Most of these complaints were either out of time or lacked merit. Upheld complaints are said to be on the basis of financial information provided following Vanquis’s or FOS’s requests, and not on the basis of information provided by TMS

TMS’s complaints process

• The key criticism of TMS is that TMS failed to carry out appropriate merits assessments before complaints were submitted. Vanquis’s position is therefore that the complaints were “submitted recklessly and indiscriminately and in breach of TMS’s duties to its clients”. Vanquis argue that the majority of the complaints should not have been brought
• Vanquis’s pleadings confirm that the claims were largely generated by TMS’s use of basic online questionnaires sent to their clients. However, those questionnaires omitted key financial details and evidence of affordability issues, with claims being handled by unqualified staff with minimal supervision
• Unresolved complaints sent to the FOS (which each result in a case fee charged to Vanquis) would fail to engage with Vanquis’s reasons for rejecting a complaint

Vanquis claims over £12 million in losses, which includes FOS case fees, extra staffing and lost profits.

Causing loss by unlawful means

Jay J found that the tort has four essential elements:

1. unlawful acts used against, and independently actionable by, a third party
2. interference with the actions of the third party in which the claimant has an economic interest
3. intention to cause loss to the claimant by the use of unlawful means
4. loss in fact caused to the claimant

The decision

Jay J held that TMS “ha[d] fallen well short of persuading [him]” that he should strike out Vanquis’s claim or grant reverse summary judgment.

In reaching his decision, Jay J accepted that “the facts of this case are novel”, but stated that it had been brought based “on the application of well-established principles to a new factual pattern”. He rejected that its “legal viability depends on an extension of existing principles”.

In summary, Jay J did not accept TMS’s criticism of Vanquis’s pleadings. He held that Vanquis’s claim met the threshold to proceed to trial, applying the four-part test to the facts as pleaded:

• He had “no difficulty” that TMS’s breaches of contractual, fiduciary, and regulatory duties to its clients could constitute “unlawful means”
• It was arguable that TMS’s actions interfered with Vanquis’s economic relationships with its customers. Vanquis’s suspension of credit in response to complaints could be seen as a foreseeable consequence of TMS’s conduct
• Vanquis had a plausible case that TMS acted with the requisite intent, as its economic loss “was a virtually certain consequence of TMS’s actions and TMS knew this to be the case”. However, this could only be proven as a matter of inference and would depend in part on how its witnesses were cross-examined at trial
• Vanquis had pleaded sufficient loss which may have been caused by TMS’s actions, Jay J concluded that it was “fairly obvious that Vanquis may well have sustained the types of loss it has pleaded”. TMS did not press this issue in oral submissions, which is likely to require expert evidence at trial

Analysis

• It must be recognised that this was an interlocutory application, and not a trial; Vanquis must do much more than show it has an arguable case at any final hearing. Jay J was clear that he was not, at this stage, “expressing any view as to whether Vanquis’s case is right”. However, the High Court has clearly endorsed the viability of Vanquis’s claim
• This decision may well have significant implications for the financial sector, both for firms receiving complaints and for professional representatives bringing them. In particular, financial institutions dealing with mass complaints (not just those based on unaffordability) will be encouraged that this case, along with the recent introduction of FOS case fees for professional representatives in certain circumstances, will lay a marker for a future of better standards
• Although not directly addressed in the case, the implications for professional indemnity insurance are also clear. The court’s acceptance that a law firm could be liable to a third party for economic loss arising from its claims-handling practices introduces a new category of risk. Jay J’s emphasis on recklessness and systemic failure suggests that insurers may scrutinise firms engaging in volume claims management activities more closely

Update

TMS Legal applied for permission to appeal the High Court’s findings to the Court of Appeal. In December 2025, the Court of Appeal refused to grant permission.

Although the grounds of the appeal have not been published, the court will only grant permission where the appeal has a real prospect of success, or there is some other compelling reason for the appeal to be heard. As the court has refused to grant permission, we suspect the court found the appeal grounds to be weak and/or unsuitable for strike out at this stage.

Vanquis’s claim will now continue to proceed in the High Court. Court records suggest that pleadings have now closed, and we understand that a case management conference took place earlier this month (December 2025). Further news is now awaited.