In a landmark development, Vanquis Bank (“Vanquis”) has brought a lawsuit against TMS Legal (“TMS”), a claims-focused law firm, alleging that TMS’s mass-submission of unmeritorious affordability complaints inflicted substantial financial harm on the bank. At the heart of the case is the tort of “causing loss by unlawful means.”
The Allegations
Vanquis alleges that between October 2022 and August 2024, TMS referred approximately 33,000 affordability complaints against it. According to Vanquis, the majority of these claims were “recklessly and indiscriminately” submitted without proper due diligence or reasonable legal grounds. Only around 14% were accepted by Vanquis, while about 10% succeeded at the Financial Ombudsman Service (FOS), indicating Vanquis contends most were meritless.
As a result, Vanquis claims it suffered significant financial losses: around £2.8 million in temporary staffing, about £930,000 annually in management diversion, over £9 million in FOS referral fees, and lost profits of at least £270,000.
Legal Strategy: Economic Tort in a New Context
Vanquis chose to pursue the tort of causing loss by unlawful means, an economic tort usually reserved for competition or employment disputes, but rarely for use in this context. Vanquis asserts TMS breached duties to its own clients by making false or reckless representations about the merits of affordability claims, thereby interfering with clients’ freedom to continue borrowing from Vanquis and intentionally inflicting financial harm to enrich itself from the small number of successful claims.
TMS responded by seeking to strike out the case, arguing that this tort should not apply in such circumstances. They contended the elements of “interference” and intent, the core requirements of the tort, aren’t met here. They also argued Vanquis should have escalated any concerns via the Solicitors Regulation Authority or the Financial Conduct Authority, not through an economic tort claim.
The Court’s Take
On 25th of June 2025, Mr Justice Jay refused to strike out Vanquis’s claim, affirming the tort could apply in these circumstances. He acknowledged the case’s novelty but stated that “if Vanquis’s case is right, this would be an example of egregious conduct by TMS.” He emphasised that no legal principle bars applying the tort in this context, meaning the claim can proceed to trial.
The judge clarified that he was not expressing any opinion on the facts, only that there was a sufficient legal basis to proceed. TMS maintains it acted within professional and regulatory bounds and plans to vigorously defend the allegations at trial.
Why It Matters
This case is significant for several reasons:
- 1. Expansion of the Tort: It marks one of the first potential uses of the economic tort of unlawful means outside of competition or employment contexts.
- 2. Accountability in Volume Claims: It challenges the volume claims business model that prizes quantity over quality, spotlighting ethical duties to clients and respondent firms alike.
- 3. Financial Institution Recourse: It gives lenders a potential new legal remedy for managing surges in claims deemed unmeritorious.
Ultimately, the case will turn on whether Vanquis can establish that TMS intentionally used unlawful means to cause loss by submitting unjustified claims. As the trial unfolds, both lenders and law firms will be watching closely: this decision could redefine the legal landscape of claims management and economic tort liability.
