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We wrote recently about the £200 million Mastercard settlement and the strange maths behind its “£45–£70” headline. Spread across the roughly 44 million people the case was brought on behalf of, the settlement works out at only a few pounds per person. Now the Solicitors Regulation Authority (SRA) has published something that makes the Mastercard story look less like an isolated oddity and more like part of a much bigger problem. The regulator has been building a programme of work around high-volume consumer claims (HVCC) – cases where large numbers of consumers pursue similar claims against the same organisation, often through “no-win, no-fee” arrangements. The SRA’s position is fairly simple. When these cases work properly, they can widen access to justice. When they don’t, the sheer number of consumers involved means the problems get bigger too. And although Mastercard itself isn’t a case about a firm of solicitors behaving badly, many of the problems the SRA is worried about are remarkably familiar. Start with the money Merricks’ legal team reportedly billed more than £18 million over the course of the case. Mastercard’s own legal costs have never been made public. For the consumers supposedly at the centre of proceedings, there is very little visibility over what all that litigation actually cost, who ultimately paid for it, or whether those costs were proportionate to what consumers eventually received. That question of transparency is one of the SRA’s central concerns in high-volume claims: consumers need to understand the costs, fees and financial arrangements sitting behind a claim supposedly being pursued in their interests. But the Mastercard case becomes more revealing when you look at who financed it. Then there’s the funder The case was backed by litigation funder Innsworth Capital. That arrangement mattered because bringing a claim of this size requires enormous amounts of money. A funder takes that risk in return for a share of the proceeds if the case succeeds. The problem comes when the interests of the funder and the interests of the consumers stop pointing in the same direction. That is essentially what happened here. Innsworth had expected a settlement of roughly £400 million. When Merricks agreed to settle with Mastercard for £200 million instead, Innsworth opposed the deal. The Competition Appeal Tribunal approved it anyway. The dispute didn’t end there. Innsworth challenged the outcome and entered arbitration with Merricks over the funding agreement. So a case that began as an attempt to recover money for consumers ended with a fight between the person representing those consumers and the company that financed him. That is exactly the kind of tension the SRA is now looking at. The regulator is consulting on new rules governing how solicitors deal with third-party litigation funding because it is concerned that poorly structured arrangements can threaten the stability of claims and produce outcomes that do not serve consumers well. And the final numbers in Mastercard show why those incentives matter. Follow where the money goes Innsworth is expected to receive close to £68 million. Meanwhile, the case was brought on behalf of roughly 44 million consumers. The settlement does provide for individual payments considerably higher than a couple of pounds for people who successfully claim. But measured against the size of the class the case was originally brought to represent, the £200 million settlement amounts to only a few pounds per person. That contrast is difficult to ignore. After years of litigation, tens of millions in legal and funding costs and a £200 million settlement, one of the largest clearly identifiable beneficiaries is the litigation funder. The SRA lists financial loss to consumers and loss of trust in legal services among the potential harms it sees in the high-volume claims market. You can see why. And Mastercard isn’t the only place this is happening The same questions are now appearing in another enormous consumer compensation story: motor finance. The FCA has been trying to establish a redress scheme for people who may have been overcharged because of historic motor finance commission arrangements. It estimates the scheme could return around £7.5 billion to roughly 12 million eligible agreements. But the scheme has become tied up in legal challenges. That delay matters because there is already an industry of claims management companies and law firms offering to pursue motor finance compensation on consumers’ behalf. The SRA has warned about firms cold-calling consumers, misleading them about likely compensation and, crucially, failing to make clear that there may be a free route to redress. That creates an obvious gap. A regulator says consumers may be entitled to compensation and wants to provide a route for them to receive it without paying a claims company. The official process slows down. Consumers become uncertain about when — or whether — they will be paid. Into that uncertainty step firms offering to handle the claim for them, in return for a cut. The longer the official route takes, the more attractive that offer becomes. That’s the bigger story None of this means Mastercard, Merricks, Innsworth or the firms involved broke the rules. And the SRA has not made a regulatory finding about the Mastercard case. In some ways, that is precisely why its latest work is interesting. The regulator is looking at whether the rules themselves do enough to protect consumers when litigation funding, legal fees and mass claims all collide. Its consultation on third-party litigation funding, open until 17 September 2026, asks what obligations solicitors should have when they use or arrange funding and how consumers can be better protected when those financial arrangements start influencing a claim. Mastercard and motor finance are very different cases. But they expose the same uncomfortable question. When a system designed to get compensation to millions of consumers becomes slow, complicated and expensive, who is best positioned to benefit from that complexity? Increasingly, the answer can be the people financing, managing and pursuing the claims rather than the consumers the system was built for. That is the weak spot the SRA is
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Britain’s class action market is booming. Consumers are increasingly familiar with advertisements promising compensation for everything from car finance and data breaches to defective products and competition claims. Behind many of these cases sits another rapidly expanding industry: third-party litigation funding. A new Civitas report, Litigation Nation: The growth of a class action claims culture, raises important questions about where this is heading. The concern is not simply about individual lawsuits, but the emergence of a more commercialised litigation market in which legal claims themselves can become investment opportunities. The scale of the change is striking. According to figures reported by The Telegraph, third-party litigation funding grew by more than 1,000 per cent, from around £198 million in 2011 to £2.2 billion in 2022. The question is whether transparency, regulation and consumer protection have kept pace.
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After almost a decade of litigation, millions of UK consumers are finally moving toward compensation from Mastercard. But the headline figure being reported — £45 to £70 per person — only tells half the story. The Real Math Half the £200 million settlement — £100 million — is set aside for the roughly 44 million eligible UK consumers. Split evenly, that’s just over £2 each. The widely quoted £45–£70 range only works if around 5% of people actually claim, which is typical for opt-out settlements but a low bar for something marketed as compensation. The case originally sought £14 billion; the £200 million settlement Mastercard agreed to, without admitting liability, is 1.4% of that. A Funder That Sued Its Own Client Litigation funder Innsworth Capital tried to block class representative Walter Merricks from accepting the £200 million deal, arguing it fell short of the roughly £400 million return its funding agreement had envisaged. When the Tribunal approved the settlement anyway, Innsworth took Merricks to arbitration — the funder suing the very man it was funding. Mastercard, the defendant, then stepped in to give Merricks up to £10 million to defend himself against his own backer. That dispute has just been resolved: Innsworth dropped the arbitration and accepted £62.6 million plus interest, on top of tens of millions more owed from the settlement pot. A funder suing the person it bankrolled, over how much of consumers’ money it gets to keep, says a lot about whose interests these cases really serve. Where the Rest of the Money Went Merricks’ legal team is reported to have billed more than £18.1 million. Mastercard’s own legal costs, never published, could be higher still. Innsworth stands to collect close to £68 million in total. Merricks himself, who led the case for eight years, was paid £143,000 for the entire period — under £18,000 a year. Out of a £200 million settlement meant to compensate consumers for years of overcharging, lawyers and a litigation funder are set to collect tens of millions of pounds — while the 44 million people the case was actually brought for split a pot worth roughly £2 a head, before the claims discount even kicks in. Watch Out for Scams Be wary of unsolicited texts, emails and social ads promising “Mastercard compensation.” A company mentioning the settlement isn’t necessarily connected to the official claim. Nobody should feel pressured to sign agreements, hand over financial details, or pay someone simply because they’re told compensation might be waiting. Nearly ten years and £200 million later, the people who were actually overcharged are being asked to settle for a couple of pounds each, while the funder and the lawyers fight over tens of millions. If group litigation is going to mean anything for ordinary consumers, cases like this one need to put real money in real people’s hands — not just fund everyone standing between the claim and the claimant. Further Reading Official claims site: mastercardconsumerclaim.co.uk The £2.27-a-head maths and legal fees: Fair Civil Justice — Merricks v Mastercard: Who Really Wins in This Settlement? Latest on the Innsworth dispute: Legal Futures — Merricks and funder settle with consumers set for Mastercard money
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Every major consumer scandal now follows a depressingly familiar script. A corporate wrongdoing comes to light. Regulators begin investigating. Consumers start asking legitimate questions about their rights. And almost immediately, an army of claims management companies, lead generators and marketing firms descends, competing not to deliver justice but to acquire claimants. The car finance scandal is proving no different. This week, the Information Commissioner's Office executed search warrants at properties linked to five companies as part of an investigation into suspected unlawful marketing connected to motor finance claims. According to the regulator, businesses under investigation are believed to have sent around 170 million unsolicited text messages in just eight months, prompting more than 12 million complaints from members of the public.
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For more than a decade, Britain's class action regime has expanded with remarkably little resistance. Backed by litigation funders, claimant law firms and professional class representatives, collective proceedings have grown into a thriving commercial industry, with ever larger claims promoted as victories for consumer justice.
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If litigation funding has become a multi-billion-pound investment market, why isn't it regulated like one? That was the question posed in the House of Lords by Baroness Bowles of Berkhamsted, who tabled an amendment calling for third-party litigation funders to come under the supervision of the Financial Conduct Authority (FCA). Ministers accepted that litigation funding requires greater regulation. What they failed to explain is why they continue to resist the obvious regulator. That reluctance is becoming increasingly difficult to defend.
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Independent information platform on class action risks, litigation funding structures, and claimant awareness.