The man spearheading the £14bn legal claim against Mastercard has defended the advent of US-style class actions in Britain, saying they give wronged consumers the chance to hold businesses to account.
Walter Merricks — whose career has taken in roles at the law reform and human rights organisation Justice, the Law Society, the Gambling Commission, and the press monitor Impress — is the public face of a consumer claim testing new ground in the English legal system.
He is leading a class action on behalf of more than 46m British consumers for losses suffered from alleged illegal credit card fees, in the first mass consumer claim brought under the new regime introduced by the Consumer Rights Act 2015.
The Mastercard action is the most significant test to date of English courts’ appetite for US-style consumer class actions — and of the role of litigation finance businesses, which support legal claims in return for a share of any settlements or damages.
“A lot of the criticism of the US class action system is not justified,” said Mr Merricks, adding that the Canadian system worked “extremely well” and had more safeguards.
“Nobody in Canada thinks that’s an unfair system or one that imposes undue burdens on business.”
Mr Merricks, 73, said that law firm Quinn Emanuel had contacted him after the 2015 act was passed, as collective consumer actions typically need leadership from an individual.
“It was important to have someone with credibility and experience, with both litigation and financial services,” he said. “Naturally I was very interested.”
Mr Merricks was the first head of the UK’s Financial Ombudsman Service from 1999 to 2009, giving him a ringside seat for Britain’s biggest financial scandals — from the mis-selling of payment protection insurance to the collapse of the insurer Equitable Life.
“I knew we just didn’t have a proper system for providing consumer redress where there had been large-scale damage but sometimes for relatively small amounts of money,” he said.
He also defended litigation funders, arguing that they “run a substantial risk” of either losing the case or there being no money left over after consumer claims.
Innsworth, a litigation funder, supported Mr Merricks taking the case to the Court of Appeal. The firm, which is also funding a shareholder claim against the carmaker Volkswagen, can call upon backing from US hedge fund Elliott Management. It is nearing a deal for further financing, believed to be about £40m.
Ian Garrard, managing director of Innsworth, said the Mastercard consumer claim was attractive because it was a “novel” case and he called the arrangement “equitable”. He added that Elliott gave Innsworth the financial firepower to take on groundbreaking and substantial claims.
While Innsworth would be left out of pocket if all 46m eligible claimants recovered money from Mastercard, even in well publicised claims such as the PPI scandal most consumers usually fail to act.