Recovery in progress propels Vanquis to record profits
In a significant development for the motor finance industry, Vanquis Bank is currently engaged in a legal fight against Claims Management Companies (CMCs), particularly The Money Solicitor Legal Limited (TMS). The High Court recently refused to strike out Vanquis' novel claim against TMS, allowing the bank to pursue damages for losses caused by TMS's reckless and unmeritorious affordability complaints.
Vanquis alleges that TMS's indiscriminate mass submission of complaints resulted in over £12 million in losses for the bank. This case could establish that CMCs may be liable for damages when they bring such unmerited complaints, potentially deterring similar conduct by CMCs and law firms in the future.
The bank, which provides "second chance" lending to customers with adverse credit histories, claims TMS breached duties to customers by not properly assessing complaint viability before submitting them to Vanquis and the Financial Ombudsman Service (FOS). Since Vanquis pursued this action, complaints related to Vanquis from CMCs to the FOS have become negligible, suggesting the litigation and regulatory scrutiny may be curbing excessive or reckless claims.
Regulators like the FCA and SRA have also warned firms about misconduct in motor finance claims and are considering the introduction of an industry-wide redress scheme. The FCA has indicated it will decide shortly whether to propose such a redress scheme, which would simplify consumer participation and reduce dependency on CMCs or law firms that may charge up to 30% commission.
In a positive turn of events, Vanquis' operational performance is also showing promising signs. Operating costs for the bank dropped by 24 percent year-on-year, reaching £137.4m in the first half of 2025. This decrease was accompanied by a profit before tax of £6.2m for the same period, contrasting the £91.9m loss recorded for the second half of 2024.
Net interest income for Vanquis showed a one percent growth during the first half of the year, while total income took a three percent hit. However, the bank managed to reduce complaints costs by 36 percent in the first six months of 2025, following the surge in complaints in 2024. FOS fees for Vanquis increased by 66 percent to £24.8m for the period in 2024 due to the surge in complaints, but the bank has since managed to bring these costs under control.
Ian McLaughlin, chief executive of Vanquis, expressed confidence in the bank's position due to not participating in discretionary commission arrangements (DCAs). This decision will likely protect Vanquis from being "in scope for this element" of any redress scheme the FCA may propose following the Supreme Court's verdict on August 1.
In conclusion, Vanquis' ongoing legal case against CMCs marks an important step in addressing unmeritorious claims and could have significant implications for reducing such conduct and shaping any future industry-wide redress scheme for motor finance claims. The outcome may introduce legal and financial risks for CMCs, influencing their operational models and potentially leading to more regulated and responsible consumer redress mechanisms.
[1] Source: Vanquis Bank press release, August 2025 [2] Source: Vanquis Bank court documents, August 2025 [3] Source: FCA press release, July 2025 [4] Source: SRA press release, June 2025 [5] Source: FCA consultation paper, August 2025
- The case between Vanquis Bank and The Money Solicitor Legal Limited (TMS) could potentially lead to CMCs facing financial penalties for submitting unmerited complaints, which may discourage similar actions in the motor finance, banking, and insurance industries.
- In the motor finance sector, Vanquis Bank has been proactive in combating unmeritorious complaints, which has resulted in a significant decrease in complaints related to Vanquis from Claims Management Companies (CMCs) to the Financial Ombudsman Service (FOS), impacting the business and finance aspects of both parties.
- Regulators like the FCA and SRA have highlighted the need for more regulated and responsible consumer redress mechanisms, especially in the motor finance industry, potentially influencing the future of banking-and-insurance operations and finance practices within these sectors.
