MASTERCARD RULING IS JUST THE START

If you thought the PPI scandal was a case of the unlikely becoming fact, by finally racking up over £50bn in compensation on a product that was never even regulated, then you will be interested to see further bulk actions coming down the shute, ones that will make the endowment scandal seem like a footnote to the real thing. 

The green light was given on 19 August 2021 by the Supreme Court for the first UK claim to proceed with a claim brought by former head of the Financial Ombudsman Service, Walter Merrick.  This is against Mastercard, and he believes he will be representing 46 million British consumers in a £14bn (US$19.4bn) consumer lawsuit against Mastercard over interchange fees.  Now a  wave of new follow-on damages claims seeking class action status is coming our way. 

Many applications under the  Consumer Rights Act have been brought since the Mastercard case fell with the cards up.  Most refer to violations of competition law, often proven by a regulator, with the cases then picked up in class actions. 

1. Justin Gutmann is the former head of research at consumer rights group Citizens Advice, and also spent eight years working for London Underground. He is bringing a £98m lawsuit against three train operators for allegedly forcing millions of rail passengers since October 2015 to pay twice for their journeys.  It accuses them of overcharging travellers in an abuse of their dominant market position.
2. UK Trucks Claim Ltd, is seeking compensation of up to £20,000 per truck for the owners of tens of thousands of buyers of the goods vehicles who bought the vehicles at allegedly inflated prices. The Road Haulage Association, a trade body proposed opt-in collective proceedings involving more than 15,000 claimants and valued at over £1bn. This follows an EU fine levied against the truck sellers for price fixing.
3. Justin Le Patourel – a telecoms switching expert - is bringing a £589m class action against BT Group plc over unfair landline prices. Le Patourel claims to represent approximately 2.3 million mainly elderly and low-income customers of the telecommunications company who have been allegedly overcharged (as cited by an Ofcom report)
4. Michael O’Higgins FX Class Representative Ltd and former Chairman of the pension regulator, is bringing collective proceedings against a group of banks accused of rigging the foreign exchange spot market, with potentially billions of pounds at stake.

Class actions are here to stay, US style.  

Once again, IFAs win.  

Staying small serves to avoid spurious bulk claims, and if you follow basic guidance from IFAC, get your files checked and follow the actions set out in your annual audit, you cannot really go far wrong.