A landmark settlement agreement between Mastercard and British consumers is facing legal challenges, threatening the future of class action funding in the UK. Mastercard’s agreement to settle a long-standing lawsuit over card fees for £200 million has been met with opposition, as funders question the fairness of the deal.
The settlement, announced in December, is a sharp reduction from the £10 billion estimate previously placed on the case. If every claimant in the 44-million-strong class sought compensation, they would each receive just £2.27.
The funding group Innsworth Capital, which has invested over £45 million in the case, has objected to the settlement, arguing that its £55 million share—half of the total settlement amount—is unjust. Innsworth claims that the deal fails to fairly compensate the funders for their financial outlay and efforts.
The Competition Appeal Tribunal in London will now decide on the legality of the settlement, marking a pivotal moment for the UK’s emerging class action funding sector. The case is significant not only because it challenges the terms of a large-scale settlement but also because it could have wider implications for funding agreements in the UK.
Earlier concerns arose after a 2023 Supreme Court ruling invalidated numerous funding agreements, creating uncertainty within the sector. Additionally, the Court of Appeal is expected to examine the legality of funding agreements in cases against Apple and Sony later this year.
Despite the objections, consumer advocate Walter Merricks, who led the case against Mastercard, and the payments giant itself maintain that economic analysis suggests the settlement is reasonable, with the value of the claim significantly reduced after adverse court decisions limited the scope of the lawsuit.
Read more:
