Why Merricks v Mastercard is a landmark judgment for funders

Merricks v Mastercard is an opt-out collective action that commenced in 2016 and had the final judgment delivered on 20 May 2025. It was headline-worthy: not for the amount paid out to individuals, but for the scale of the claim and its wider implications.

Up to 44 million UK consumers could now claim between £45 and £70 following a £200 million class action settlement against Mastercard, the UK’s largest collective claim to date, approved by the Competition Appeal Tribunal in early 2025.

And no, you didn’t need to own a Mastercard. If you bought goods or services from UK businesses that accepted Mastercard credit cards between June 1997 and June 2008 and lived in England, Wales, or Northern Ireland for at least three months during that period, you’re eligible.

For Scottish consumers, the eligibility period began in May 1992. Payments are expected before the end of 2025.

A ’just and reasonable’ outcome, but a fractured journey to get there

Walter Merricks CBE, former Chief Ombudsman of the Financial Ombudsman Service, spent nearly a decade leading the claim. He argued that between 1992 and 2008, shoppers were charged higher prices after Mastercard wrongly levied fees on retailers, costs that were quietly passed on to all consumers, regardless of how they paid for goods or services.

The legal battle spanned nearly every level of the UK justice system. What began as a claim for over £10 billion ended in a £200 million settlement. On 20 May 2025, the Competition Appeal Tribunal approved the settlement, calling it ’fair and just’. Merricks agreed, but the litigation funder, Innsworth Capital, strongly disagreed, arguing the payout left investors and consumers short-changed.

As Merricks put it:

’...breaking new ground and leading the way in ensuring that the class action regime introduced in the Consumer Rights Act 2015 can be shown to work effectively – even in a case like mine where the compensation obtained is far less than claimed at the outset.’

The Tribunal itself noted the case

’may have far-reaching implications for class actions in the UK.’

And this isn’t isolated. The Supreme Court’s decision on commission disclosure in July 2025 clarified that undisclosed commissions can still make a finance agreement unfair under the Consumer Credit Act. The motor finance industry is now consulting with the FCA on an industry-wide scheme to compensate motor finance customers who were treated unfairly between 2007 and 2024.

The question is, how many other industries are sitting uncomfortably at the board table, knowing that these rulings mean they have historically failed to disclose fees or costs now deemed material to consumers?

Beyond litigation: the logistical challenges for the Mastercard settlement

The £200 million settlement is real, but only half, £100 million, is reserved for consumer payments. And even then, payouts depend on consumers registering their claims before the end of the year.

That means managing:

• Eligibility criteria

• Mass communications

• Identity verification

• Secure payment logistics

All for a pool of up to 44 million people.

Here’s how the calculations work:

• If 5% (2.2 million) claim, each person receives £45

• If more make a claim, payouts could fall as low as £2.50

• If fewer make a claim, the payments rise, but are capped at £70

The court ruled that any unclaimed funds will be donated to the Access to Justice Foundation, a charity that supports legal help for disadvantaged consumers.

The practical delivery is being managed by Epiq Class Action and Claims, which is reportedly charging £2.9 million for the job, based on a 5% take-up.

What’s the lesson here? The bigger the claim, the more fragile the logistics, and the more exposed your systems become.

Too often, businesses have to respond with spreadsheets, call centre escalations, and manual workarounds. Meanwhile, service quality suffers, customer frustration rises, and administration costs soar.

Redress at scale: could you cope?

Let’s turn the spotlight on you for a moment. What if this were your company? What if a large-scale issue, fees, errors, or unfair treatment, triggered thousands of complaints or refund demands?

Would your systems be able to:

• Identify affected customers quickly and accurately?

• Communicate eligibility clearly and with easy accessibly?

• Manage opt-ins, consent, and payouts at scale?

• Respond to claims quickly and efficiently?

• Report to regulators, boards, and consumers with confidence?

For many leaders, the honest answer is: not yet. Even companies with solid complaint handling processes often rely on manual workarounds, disconnected systems, or outdated tools not designed for collective redress or sudden large volumes.

The time has come to make your systems more effective, efficient, and secure: litigation and regulation are moving fast to protect consumers, and this includes historic issues.

Three lessons for business leaders

1. Class actions aren’t going away anytime soon

The introduction of the Consumer Rights Act 2015 allowed for class actions in UK competition claims. Merricks v Mastercard has been a successful test case, opening the door to more opt-out collective claims in the UK, and proving that it can work effectively. Companies operating in regulated sectors should brace themselves for more scrutiny and more sophisticated consumer action.

2. The systems behind redress matter

Whether you're settling 200 claims or 2 million, the ability to manage redress quickly, fairly, and securely is a reputational and regulatory imperative, not just an operational detail.

3. Litigation funding is reshaping the legal landscape.

Funders are enabling cases that might never have reached court, but growing scrutiny over how proceeds are divided is intensifying. Innsworth Capital, which funded the Mastercard claim, has publicly criticised the outcome and has sought a judicial review to challenge the division of proceeds.

Endnote

This case will very likely influence the growing debate around collective redress and the role of third-party litigation funding in the UK and its sources.

Notably, Walter Merricks received up to £10 million in personal protection from Mastercard against potential legal action brought by the funder.

On 10 June 2025, Innsworth, submitted an application seeking judicial review of the Tribunal's decision regarding the allocation of the £200 million settlement proceeds and the portion that should be awarded to the litigation funder as compensation. (The application challenges only the distribution method and funder compensation, not the settlement agreement itself.) Currently pending, the Administrative Court will determine whether to grant this application.

Are you struggling with complaint volumes or backlogs?

Regulators and customers are demanding more from you. Manual processes and CRMs are not designed for complaint handling or handling redress at scale. You can easily fix this. Complaint case management software is your operational control centre for complaint and redress oversight. It’s easy to set up and scales with your business. Your team saves 60% of time currently spent on manual processes and ROI is seen within months, not years.

You may also find this a useful read if you are just getting started: How to choose complaint case management software helps you cut out the noise, avoid feature overload, and find a system that actually works for your team.

FAQs

Who is the class representative and what is their role?

Mr Walter Merricks CBE serves as the class representative, appointed by collective proceedings order. In this capacity, he has led the claim against Mastercard on behalf of all class members, managing the legal team and expert advisers, directing the claim's strategy, and deciding on key matters including settlement negotiations and the application to the Competition Appeal Tribunal for approval. Mr Merricks has maintained regular communication with the class through formal notices on the claim website and media engagement, and will continue to do so, advising eligible members on how to claim their share of the settlement.

Mr Merricks is a qualified lawyer with a distinguished track record in consumer protection and corporate accountability. He previously served as Chief Ombudsman of the Financial Ombudsman Service for ten years, bringing considerable expertise to this representative role.

What’s the claim about?

The claim concerns interchange fees; charges levied by Mastercard for payment processing services. Mr Merricks contended that these fees were excessive and that retailers passed the inflated costs to consumers through higher prices, regardless that the payment may have been made with a different payment other than a Mastercard. The claim builds on the European Commission's December 2007 decision, which found Mastercard's interchange fees unlawful for intra-EEA transactions between 1992 and 2007, and noted that consumers likely paid elevated prices as a result. The claim covers purchases made by UK consumers from 22 May 1992 to 21 June 2008, plus a two-year ’run-off period’ to 2010, during which Mr Merricks argued prices remained inflated.

Why did Innsworth Capital challenge the settlement?

Innsworth Capital, the litigation funder, initially challenged the settlement terms, arguing it should receive £179 million of the £200 million settlement while capping consumer payments at £4 each. The Tribunal rejected these arguments entirely, instead accepting the class representative's proposal to ring-fence a minimum of £100 million for consumers, with any remaining funds after costs going to The Access to Justice Foundation.

Following this rejection, Innsworth subsequently filed an application in June 2025, for judicial review of the Tribunal's distribution decision. At the time of writing, the decision is still pending.

What is a collective settlement?

A collective settlement is an agreement between the parties to end collective proceedings. While the class representative and defendant can negotiate a settlement, it requires approval from the Competition Appeal Tribunal, which will only grant a Collective Settlement Approval Order if satisfied that the terms are ’just and reasonable’.